The provisions amend various sections of the Bankruptcy Code on a temporary basis to provide additional relief to businesses and individuals directly impacted by COVID-19 pandemic. These provisions also establish procedures to ensure that relief payments and mortgage forbearances granted under the CARES Act and future COVID-19 legislation can be properly implemented under the Bankruptcy Code.
Section 2 amends section 541 of title 11 to ensure that federal coronavirus assistance can be used by the families who need relief rather than creditors. It exempts federal coronavirus relief payments from being treated as property of the estate in bankruptcy proceedings. This amendment sunsets 1 year after enactment.
Section 3 amends section 1328 of title 11 to ensure that families in Chapter 13 bankruptcy cases who have completed all of their plan payments will not be denied a discharge because they have fallen behind on their mortgage payments during this crisis. It makes clear that a debtor will not be denied a Chapter 13 discharge if the debtor misses 3 or fewer mortgage payments. The mortgage payments would continue to be owed to the home mortgage creditor, but the homeowner would not lose the benefits of a bankruptcy discharge for other debts. This amendment sunsets 1 year after enactment.
Section 4 amends section 525 of title 11 to ensure that homeowners in bankruptcy are eligible for mortgage forbearance or other COVID-19 mortgage assistance and ensures that renters are eligible for COVID-19 eviction relief. This amendment sunsets 1 year after enactment. Section 5 amends sections 501 and 502 of title 11 to set forth a process for creditors to file a proof of claim for the amount lost during forbearance periods granted under the CARES Act, and to impose related requirements for such claims. This amendment sunsets 1 year after enactment.
Section 6 amends section 1329 of title 11 to permit modification of a chapter 13 plan to account for proofs of claim filed pursuant to section 4 above. This amendment sunsets 1 year after enactment. Section 6 also amends section 365(d)(3) of title 11 to allows the bankruptcy court to grant a debtor an additional 60-day delay (120 total) to pay rent if the company has experienced and is continuing to experience a material financial hardship as a result of COVID-19. Any deferred rent arising from the delay would be entitled to an administrative priority claim. This amendment sunsets 2 years after enactment.
Section 7 also amends 365(d)(4) of title 11 to allow a company up to 300 days to determine whether to keep or get rid of certain leases for real property. In this uncertain environment, it is difficult for companies like retailers to determine what their future footprint should be. Allowing companies more time will give them greater visibility into the future will help them make more efficient decisions on their leases. While the businesses are deciding what to do they will still be obligated to continue to pay their rent, absent court order granting relief. Moreover, landlords have the ability to ask the court to allow them to foreclose on the property if they are not receiving adequate protection during this time period. This amendment sunsets 2 years after enactment.
Section 8 amends section 547 of title 11 to protect future payments from being clawed back from landlords and vendors, but only to the extent such payments do not include any fees, penalties, or interest in an amount greater than the amount of fees, penalties, or interest the business would have owed had it not entered into the flexible payment terms. This amendment sunsets 1 year after enactment.
Section 9 amends section 366 of title 11 to prevent the termination of utility services in bankruptcy by ensuring that renters will not be required to furnish a security deposit to maintain utility services during bankruptcy. This amendment sunsets 1 year after enactment.
Section 10 amends section 507 of title 11 to exempt customs brokers who collect and pay duties to Customs and Border Patrol on behalf of importers from the claw back provisions of the bankruptcy code when an importer files bankruptcy. This amendment sunsets 1 year after enactment.