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

Bill: 116-s-4479
Sponsor: full_name: Sen. Tillis, Thomas [R-NC]
Introduced: 2020-08-06
Policy area: Finance and Financial Sector
Subjects: Bankruptcy

Cardiovascular and respiratory health

Contracts and agency

Emergency medical services and trauma care

Infectious and parasitic diseases

Landlord and tenant
Latest action: action_date: 2020-08-06
text: Read twice and referred to the Committee on the Judiciary.

Summaries:
action_date: 2020-08-06
action_desc: Introduced in Senate
text: <p>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. </p> <p>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. </p> <p>These provisions have a two-year sunset.</p>

tv_txt: II 116th CONGRESS 2d Session S. 4479 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.

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.