Taking a break from bankruptcy and business, I thought I would share this piece about the importance of donor anonymity supported by the late Justice Ginsberg. There are so many fascinating facets to the law and its essence to the fabric of our society and economic ecosystem. Wishing everyone a great weekend!
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Alert! All entrepreneurs and intrapraneurs in the healthcare space! COVID-19 has accelerated the advent of telehealth, and providers are vying for the #1 spot. A recent lawsuit filed by Teladoc highlights the importance of promptly securing patents and other forms of digital IP as barriers to entry from day 1.
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Good news! A New Orleans judge has found the CARES Act to permit a 7 year extension of a chapter 13 plan whose payments were in default prior to enactment of the Act, holding that the currency of payments is irrelevant. In fact, most chapter 13 plans are in a state of default and ultimately fail as a result. The CARES Act’s goal to provide debtors with the extra leg up has been validated, further boosting fresh start opportunities in our new normal of COVID-19.
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Borrowers and lenders are being advised to sit tight, while Congress reworks the kinks toward debt forgiveness for PPP loans. As outlined by the NYT, progress is being made toward overcoming the various hurdles so that all stakeholders will be able to achieve the initiative’s well-intended respite and fresh start.
Read MoreThe Commonwealth of PA was recently permitted to sustain revocation of a debtor’s gaming license and keep the $50M paid per state forfeiture laws, as a license is considered a privilege versus reclaimable property. This is yet another example of the intricacies of pre-bankruptcy planning, as lawyers and debtors collaborate to re-tool with minimal friction.
Read MoreThe SBA is thankfully beginning to forgive PPP loans, staving off the backlog blocking new loans, as well as averting bankruptcy filings in the face of mounting debt. Legislation is also being drafted to streamline the paperwork for forgiving small loans, by permitting borrowers to self-verify to the proper use of funds.
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The Student Borrower Bankruptcy Relief Act has been initiated by the House to eliminate the Bankruptcy Code’s ambiguous barrier to student loan discharge, which has been read to require a showing of severe financial hardship if the debtor is forced to re-pay. This complements the judicial trend to discharge private student debt to effect the policy of pro rata sharing among creditors and provide a fresh start to debtors.
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Filing for bankruptcy can help a tenant break a long-term above-market lease, as bankruptcy law provides the tenant with a special cap on damages at three years rent. Planning ahead is key, and on the flip side, a landlord can head off a potential major loss by keeping tabs on its tenants’ financial portfolios as the market permits.
Read MoreFor example, a typical clause in leases states that a tenant’s filing for bankruptcy causes a default, allowing the collection of remedies. This is merely a scare-tactic and is known as an ipso facto clause that has zero legal effect. In fact, a bankrupt tenant can even make the unilateral decision to continue the lease.
Read MoreA salary raise by a distressed business entity for no services, or transfer of funds to a new entity for no value are prime examples of fraudulent transfers, as reasonably equivalent value has not been exchanged. These deals are vulnerable to unwinding, but with advance planning, the outcome can be a win-win for all.
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