Authorizing the bankruptcy courts to allow Subchapter V of Chapter 11 (Subchapter V) debtors, Chapter 12 family farmer debtors, and Chapter 13 debtors to obtain Paycheck Protection Program (PPP) loans, provided the SBA notifies the US Trustee that debtors are, in fact, eligible for the PPP loans.

Reducing preference exposure to commercial landlords and suppliers that received payments to cover arrearages after March 13, 2020.

Allowing Subchapter V debtors to extend their time to perform under commercial leases beyond the initial 60 days.

Allowing federally backed mortgage holders to file a claim in a chapter 13 at the end of a CARES Act forbearance period and adding a procedure for modification of a Chapter 13 plan to provide for the forbearance claim.

Section 364 of the Bankruptcy Code to provide that bankruptcy courts may authorize Subchapter V debtors, Chapter 12 family farmer debtors, and Chapter 13 debtors to obtain a loan under the PPP. The CARES Act implemented on March 27, 2020 provided billions of funds for small business loans under the PPP, but was silent on whether companies in bankruptcy may receive PPP loans. The Small Business Administration (SBA) promulgated rules which denied bankrupt businesses access to PPP loans. Several debtors filed adversary proceedings challenging the SBA's rule and the bankruptcy courts created a split whether the SBA's rule to prohibit PPP loans in bankruptcy is valid and not in violation of section 525 of the Bankruptcy Code. Now, under the 2021 CAA, certain debtors may be eligible for PPP loans with bankruptcy court authorization. However, this amendment does not become effective until the SBA Administrator submits a written determination to the Office of the US Trustee that debtors are generally eligible for PPP funding. If the SBA permits debtors to obtain PPP funding, section 364:

The amendments to section 364 of the Bankruptcy Code are effective through December 27, 2022, regardless of if or when the SBA determines debtors are eligible. Existing debtors will not be permitted to obtain PPP loans.

On January 6, 2021, the SBA issued an interim final rule (IFR) outlining provisions for the PPP as amended by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, which is included in the 2021 CAA. This IFR consolidates the previous 24 interim final rules and guidance issued to date for the PPP. Within the IFR, the SBA restates its position that debtors remain ineligible to receive PPP funding.

Section 365(d)(3) of the Bankruptcy Code to allow Subchapter V debtors experiencing financial hardship from the COVID-19 pandemic to extend their time to assume or reject leases beyond the initial 60 days for another 60 days (120 total). A Subchapter V debtor that seeks to extend its time beyond the 60 days must continue to perform its obligations under the lease and any claim arising from this extension is treated as an administrative priority expense for purposes of confirmation of a Subchapter V plan. This amendment is effective through December 27, 2022, but the provisions continue to apply to Subchapter V bankruptcy cases filed before the sunset date.

Section 365(d)(4) of the Bankruptcy Code to allow debtors to extend their time to assume or reject leases by an additional 90 days. Because the bankruptcy court already has the ability under existing law to increase the time to reject from 120 days to 210 days under section 365(d)(4), the amendment provides that a debtor with unexpired lease of nonresidential real property may have up to 300 days to decide whether to assume or reject the lease. This amendment is effective through December 27, 2022, but the provisions continue to apply to bankruptcy cases filed before the sunset date.

Section 366 of the Bankruptcy Code to specify that a utility cannot terminate services to individual debtors for failing to furnish a security deposit if:

Sections 501 and 502 of the Bankruptcy Code to establish a process for creditors to file proofs of claim for amounts claimed due to mortgage forbearance periods mandated by the CARES Act. The amendments create a new supplemental claim for mortgage lenders called a "CARES forbearance claim" for the amount of a federally backed mortgage loan or multifamily mortgage loan previously granted forbearance under the CARES Act. The supplemental claim must:

A debtor's confirmed plan may be modified on the request of a debtor or any party in interest to include the CARES forbearance claim. This amendment is effective through December 27, 2021.

Section 507 of the Bankruptcy Code by providing that a party that pays the US government a customs duty on behalf of an importer is subrogated to the government's priority status under section 507(a)(8)(F) for customs duties. This amendment is effective through December 27, 2021.

Section 525 of the Bankruptcy Code, which provides protection to debtors against discriminatory treatment, by clarifying that CARES Act loans may be obtained by small business debtors and they cannot be denied CARES Act relief based on past or present bankruptcy filings. This amendment is effective through December 27, 2021.

Section 541 of the Bankruptcy Code by adding a new section 541(b)(11) to exempt federal coronavirus relief payments ("recovery rebates made under section 6428 of the Internal Revenue Code of 1986") from being treated as property of the estate. This amendment is effective through December 27, 2021.

Section 547 of the Bankruptcy Code, which governs the recovery of preferential transfers for the benefit of the bankruptcy estate, to prevent a trustee from recovering as a preference any deferred payments made by a debtor after March 13, 2020 to:

This protects creditors that received deferred payments during this period. The amendment is effective through December 27, 2022, but the provisions continue to apply to bankruptcy cases filed before the sunset date.

Section 1328 to provide, among other things, that a debtor under a confirmed Chapter 13 plan may obtain a discharge on a residential mortgage even if the debtor missed up to three mortgage payments since March 13, 2020, provided the defaults are caused by a material financial hardship due, directly or indirectly, to the COVID–19 pandemic. While the unpaid mortgage payments remain owed to the lender, the debtor does not lose the benefits of a bankruptcy discharge for other debts. This amendment is effective through December 27, 2021.

Section 1329 of the Bankruptcy Code to allow modification of a Chapter 13 plan to provide for creditor CARES Act forbearance proofs of claim. This amendment is effective through December 27, 2021.

The 2021 CAA will provide expanded bankruptcy relief for individuals and businesses, and allow certain debtors additional breathing room as they struggle to keep their doors open, staff employed, and financial obligations met due to the impact of the COVID-19 pandemic.

While the 2021 CAA provides that small business debtors may obtain PPP loans, PPP loans may only be available if the SBA Administrator sends a letter to the Director of the Executive Office for the US Trustee acquiescing to PPP loans in bankruptcy. Because the SBA administrator has discretion whether to approve PPP loans during bankruptcy, it is not yet certain whether debtors may receive PPP loans. Rather, the SBA's IFR on January 6, 2021 continues to take the position that debtors are ineligible for PPP loans.

The 2021 CAA also does not appear to extend the March 27, 2021 sunset of the expanded $7.5M debt limit to qualify as a small business debtor under Subchapter V.

Practice Note, Road Map to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).