Title: A bill to amend title 11, United States Code, to change the treatment of certain rental obligations during bankruptcy.
Policy area: Finance and Financial Sector

Summary:
This bill temporarily revises bankruptcy provisions related to a lease of nonresidential real property. Specifically, if a Chapter 11 small business reorganization bankruptcy debtor is experiencing material financial hardship due to the COVID-19 (i.e., coronavirus disease 2019) pandemic, a court may extend the time the debtor may pay rent on a nonresidential real property from 60 days to 120 days. Additionally, businesses impacted by the COVID-19 pandemic have an additional 90 days to determine whether to keep or end a nonresidential lease agreement.
The bill also prohibits a bankruptcy trustee from voiding transfers of the debtor's interest due to the payment of certain rental and supplier arrearages.
These provisions have a two-year sunset.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 4479 Introduced in Senate (IS)]

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116th CONGRESS
  2d Session
                                S. 4479

   To amend title 11, United States Code, to change the treatment of 
             certain rental obligations during bankruptcy.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             August 6, 2020

  Mr. Tillis introduced the following bill; which was read twice and 
               referred to the Committee on the Judiciary

_______________________________________________________________________

                                 A BILL


 
   To amend title 11, United States Code, to change the treatment of 
             certain rental obligations during bankruptcy.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. BANKRUPTCY AMENDMENTS.

    (a) Executory Contracts and Unexpired Leases.--
            (1) In general.--Section 365(d) of title 11, United States 
        Code, is amended--
                    (A) in paragraph (3)--
                            (i) by inserting ``(A)'' after ``(3)'';
                            (ii) by inserting ``, except as provided in 
                        subparagraph (B)'' after ``such 60-day 
                        period''; and
                            (iii) by adding at the end the following:
    ``(B) In a case under subchapter V of chapter 11, the time for 
performance of an obligation described in subparagraph (A) arising 
under any unexpired lease of nonresidential real property may be 
extended by the court if the debtor is experiencing or has experienced 
a material financial hardship due, directly or indirectly, to the 
coronavirus disease 2019 (COVID-19) pandemic until the earlier of--
            ``(i) the date that is 60 days after the date of the order 
        for relief, which may be extended by the court for an 
        additional period of 60 days if the court determines that the 
        debtor is continuing to experience a material financial 
        hardship due, directly or indirectly, to the coronavirus 
        disease 2019 (COVID-19) pandemic; or
            ``(ii) the date on which the lease is assumed or rejected 
        under this section.
    ``(C) An obligation described in subparagraph (A) for which an 
extension is granted under subparagraph (B) shall be treated as an 
administrative expense described in section 507(a)(2) in accordance 
with section 1191(e).''; and
                    (B) in paragraph (4), by striking ``120'' each 
                place it appears and inserting ``210''.
            (2) Sunset.--
                    (A) In general.--Effective on the date that is 2 
                years after the date of enactment of this Act, section 
                365(d) of title 11, United States Code, is amended--
                            (i) in paragraph (3)--
                                    (I) by striking ``(A)'' after 
                                ``(3)'';
                                    (II) by striking ``, except as 
                                provided in subparagraph (B)'' after 
                                ``such 60-day period''; and
                                    (III) by striking subparagraphs (B) 
                                and (C); and
                            (ii) in paragraph (4), by striking ``210'' 
                        each place it appears and inserting ``120''.
                    (B) Subchapter v cases filed before sunset.--
                Notwithstanding the amendments made by subparagraph 
                (A), the amendments made by paragraph (1) shall apply 
                in any case commenced under subchapter V of chapter 11 
                of title 11, United States Code, before the date that 
                is 2 years after the date of enactment of this Act.
    (b) Preferences.--
            (1) In general.--Section 547 of title 11, United States 
        Code, is amended--
                    (A) in subsection (b), in the matter preceding 
                paragraph (1), by striking ``and (i)'' and inserting 
                ``, (i), and (j)''; and
                    (B) by adding at the end the following:
    ``(j)(1) In this subsection:
            ``(A) The term `covered payment of rental arrearages' means 
        a payment of arrearages that--
                    ``(i) is made in connection with an agreement or 
                arrangement--
                            ``(I) between the debtor and a lessor to 
                        defer or postpone the payment of rent and other 
                        periodic charges under a lease of 
                        nonresidential real property; and
                            ``(II) made or entered into on or after 
                        March 13, 2020;
                    ``(ii) does not exceed the amount of rental and 
                other periodic charges agreed to under the lease of 
                nonresidential real property described in clause (i)(I) 
                before March 13, 2020; and
                    ``(iii) does not include fees, penalties, or 
                interest in an amount greater than the amount of fees, 
                penalties, or interest--
                            ``(I) scheduled to be paid under the lease 
                        of nonresidential real property described in 
                        clause (i)(I); or
                            ``(II) that the debtor would owe if the 
                        debtor had made every payment due under the 
                        lease of nonresidential real property described 
                        in clause (i)(I) on time and in full before 
                        March 13, 2020.
            ``(B) The term `covered payment of supplier arrearages' 
        means a payment of arrearages that--
                    ``(i) is made in connection with an agreement or 
                arrangement--
                            ``(I) between the debtor and a supplier of 
                        goods or services to defer or postpone the 
                        payment of amounts due under an executory 
                        contract for goods or services; and
                            ``(II) made or entered into on or after 
                        March 13, 2020;
                    ``(ii) does not exceed the amount due under the 
                executory contract described in clause (i)(I) before 
                March 13, 2020; and
                    ``(iii) does not include fees, penalties, or 
                interest in an amount greater than the amount of fees, 
                penalties, or interest--
                            ``(I) scheduled to be paid under the 
                        executory contract described in clause (i)(I); 
                        or
                            ``(II) that the debtor would owe if the 
                        debtor had made every payment due under the 
                        executory contract described in clause (i)(I) 
                        on time and in full before March 13, 2020.
    ``(2) The trustee may not avoid a transfer under this section for--
            ``(A) a covered payment of rental arrearages; or
            ``(B) a covered payment of supplier arrearages.''.
            (2) Sunset.--
                    (A) In general.--Effective on the date that is 2 
                years after the date of enactment of this Act, section 
                547 of title 11, United States Code, is amended--
                            (i) in subsection (b), in the matter 
                        preceding paragraph (1), by striking ``, (i), 
                        and (j)'' and inserting ``and (i)''; and
                            (ii) by striking subsection (j).
                    (B) Cases filed before sunset.--Notwithstanding the 
                amendments made by subparagraph (A), the amendments 
                made by paragraph (1) shall apply in any case commenced 
                under title 11, United States Code, before the date 
                that is 2 years after the date of enactment of this 
                Act.
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