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CARES Act Expands Bankruptcy Options for Individuals and Small Businesses

Small Business Reorganization Act of 2019 (SBRA)

In August of 2019, President Trump signed into law the Small Business Reorganization Act of 2019 (SBRA) – a piece of legislation that gave small businesses a variety of benefits when filing for Chapter 11 bankruptcy.  Effective February 22, 2020, the SBRA offers small businesses with aggregate liabilities that do not exceed $2,725,625 the opportunity to resolve their outstanding debts and financial obligations through a more price-conscious and streamlined Chapter 11 process under a new subchapter V component of the Bankruptcy Code. In an attempt to minimize business liquidations, the SBRA will allow business owners to retain the equity in their business, while simultaneously providing more guidance and structure throughout the reorganization process at an affordable cost.

The SBRA’s key provisions include:

Simplifying the Process

Debtors now have 90 days to file their reorganization plan from the day in which they file their bankruptcy petition, with easier rules for extending their payment plans. The SBRA will also incorporate more lenient reorganization requirements. Aside from maintaining that all plans are “fair and equitable,” businesses now have two primary ways to repay their creditors: (1) the business, through its restructuring plan, will identify any “disposable income” (income not used to pay for a business’s necessary expenses) and how it plans on distributing this income to its creditors; or (2) the plan will lay out an outline of how a company intends on distributing some or all of its property, provided that it can demonstrate that such property “is not less” than the projected disposable income that would be paid to its creditors. In exchange for complying with one of these two plans, the SBRA permits business owners to maintain possession of their company.

Extending the Payment Schedule & Debt Dismissal

A small business’ debts are no longer required to be paid in full. Under the SBRA, business owners can now create a repayment schedule that can span anywhere from 3 to 5 years. By adhering to this payment schedule, business owners are permitted to maintain ownership of their companies. After complying with this 3- to 5-year creditor repayment plan, courts are required to discharge any remaining debt owed by the small business.

Standing Trustee Appointment

Similar to Chapter 13 personal bankruptcy filings, the SBRA establishes that once a small business files under the SBRA, a “standing trustee” will be appointed to oversee the case. Throughout the plan of reorganization payment period, the standing trustee will oversee the small business’ estate, which includes general business operations, reviewing the company’s financial condition, or possibly, reporting any fraud or misconduct to the court. The goal under the SBRA is that by appointing a standing trustee, small businesses will have an additional resource in ensuring that adherence to their reorganization plans. In addition, unless the court orders otherwise, no unsecured creditors’ committees are permitted to be appointed or otherwise oversee the case.

Coronavirus Aid, Relief and Economic Security (CARES) Act provisions related to expanding bankruptcy options for small businesses

Under the CARES Act enacted March 27, 2020, the debt limit under the SBRA for small businesses filing under the new subchapter V of chapter 11 of the Bankruptcy Code increases from $2,725,625 to $7.5M for a period of 1 year only. The debt limit would then decrease back to $2,725,625 after the one-year increase. For small businesses in financial distress with debts between this range ($2,725,625 - $7,500,000), a time-sensitive evaluation of bankruptcy options should be considered prior to the expiration of the expanded debt limit in March,2021.

The CARES Act also extends benefits to individuals in a bankruptcy. For individuals in a chapter 13 bankruptcy case that have a material financial hardship due to the coronavirus, bankruptcy plans can be expanded for up to 7 years. Further, the coronavirus financial assistance funds shall not be considered “income” for bankruptcy purposes.

For more information about the changes to the bankruptcy laws, please contact Michael Steel at (330) 374-7471 or masteel@bmdllc.com.

The Masks Are Back: New OSHA Regulations for Healthcare Employers

Employment Law After Hours is back with a News Break Episode. Yesterday, OSHA published new rules for healthcare facilities, including hospitals, home health employers, nursing homes, ambulance companies, and assisted living facilities. These new rules are very cumbersome, requiring mask wearing for all employees, even those that are vaccinated. The only exception is for fully vaccinated employees (2 weeks post final dose) who are in a "well-defined" area where there is no reasonable expectation that any person with suspected or confirmed COVID-19 will be present.

New OSHA Guidance for Workplaces Not Covered by the Healthcare Emergency Temporary Standard

On June 10, 2021, OSHA issued an Emergency Temporary Standard (ETS) for occupational exposure to COVID-19, but it applies only to healthcare and healthcare support service workers. For a detailed summary of the ETS applicable to the healthcare industry, please visit https://youtu.be/vPyXmKwOzsk. All employers not subject to the ETS should review OSHA’s contemporaneously released, updated Guidance on Mitigating and Preventing the Spread of COVID-19 in the Workplace. The new Guidance essentially leaves intact OSHA’s earlier guidance, but only for unvaccinated and otherwise at-risk workers (“at-risk” meaning vaccinated or unvaccinated workers with immunocompromising conditions). For fully vaccinated workers, OSHA defers to CDC Guidance for Fully Vaccinated People, which advises that most fully vaccinated people can resume activities without wearing masks or physically distancing, except where required by federal, state, or local laws or individual business policies.

Employer Liability for COVID-19 Vaccine Side Effects

As employers encourage or require employees to obtain a COVID-19 vaccine, they should be aware of OSHA recording obligations and potential workers’ compensation liability. Though OSHA has yet to revise its COVID-19 guidance in response to the latest CDC recommendations, OSHA has revised its position regarding the recording of injury or illness resulting from the vaccine. Until now, OSHA required an employer to record an adverse reaction when the vaccine was required for employees and the injury or illness otherwise met the recording criteria (work-related, a new case, and meets one or more of the general recording criteria). OSHA has reversed course and announced that it will not require recording adverse reactions until at least May 2022, irrespective of whether the employer requires the vaccine as a condition of employment. In its revised COVID-19 FAQs, OSHA states:

The New Rule 1.510 - Radical Change for Summary Judgement Procedure in Florida

In civil litigation, where both sides participate actively, trial is usually required at the end of a long, expensive case to determine a winner and a loser. In federal and most state courts, however, there are a few procedural shortcuts by which parties can seek to prevail in advance of trial, saving time, money and annoyance. The most common of these is the “motion for summary judgment”: a request to the court by one side for judgment before trial, generally on the basis that the evidence available reflects that a win for that party is legally inevitable and thus required. Effective May 1, 2021, summary judgment procedure in Florida has radically changed.

Vacating, Modifying or Correcting an Arbitration Award Under R.C. 2711.13: Three-Month Limitation Maximum; Not Guaranteed Amount of Time

In a recent decision, the Supreme Court of Ohio held that neither R.C. 2711.09 nor R.C. 2711.13 requires a court to wait three months after an arbitration award is issued before confirming the award. R.C. 2711.13 provides that “after an award in an arbitration proceeding is made, any party to the arbitration may file a motion in the court of common pleas for an order vacating, modifying, or correcting the award.” Any such motion to vacate, modify, or correct an award “must be served upon the adverse party or his attorney within three months after the award is delivered to the parties in interest.” In BST Ohio Corporation et al. v. Wolgang, the Court held the three-month period set forth in R.C. 2711.13 is not a guaranteed time period in which to file a motion to vacate, modify, or correct an arbitration award. 2021-Ohio-1785.