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Businesses that were already struggling before the COVID-19 pandemic hit the United States are now facing the consequences of having to close their doors during the public health crisis. With more bankruptcies likely on the horizon as the economy reels from the pandemic, landlords and their lenders should consider both the basics and the nuances they face in preserving and protecting their collateral in the bankruptcy arena. READ MORE
A Chicago bankruptcy court recently ruled in In re Hitz Restaurant Group that a debtor’s obligation to pay rent during its bankruptcy case may be temporarily reduced because of a force majeure clause in the lease and the governor’s COVID-19 stay-at-home order. READ MORE
The initial wave of post-COVID Chapter 11 business bankruptcies has revealed an increasing tendency for senior executives of financially distressed companies to award themselves substantial bonuses compensation immediately before placing their companies into bankruptcy. If this trend continues, it may largely nullify the efforts of Congress and the courts to rein in and strictly regulate such actions. READ MORE
The CARES Act restores the ability of corporations to carry back net operating losses generated in taxable years beginning in 2018, 2019 or 2020 for up to five years, and removes the limitation on the amount of NOLs that can be carried forward to taxable years beginning in 2018, 2019 and 2020. Therefore, a corporation with NOLs can carry back and carry forward NOLs to reduce taxable income and generate a refund of some or all of the previously paid U.S. federal income taxes. READ MORE
Charitable institutions and not-for-profit entities are particularly vulnerable to financial distress because of the COVID-19 pandemic. NFPs should not just focus on surviving the short-term, but they should also consider longer-term subsistence and resource-allocation issues. This is especially important for NFPs that struggled financially before the on-set of the pandemic. READ MORE
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