CARES Act and Bankruptcy
What Consumers and Small Businesses need to know.
HANNAH CHUNG
HYC Law, LLC
[email protected]
On March 27, 2020 President Trump signed
into law a massive $2 trillion economic
stimulus bill in response to the widespread
financial fallout brought on by the
coronavirus pandemic. Among the types
of relief included in the Coronavirus Aid,
Relief and Economic Security ("CARES")
Act are up to $1,200 in individual
disbursements (“stimulus checks”) to many
Americans, billions of dollars in loans and
relief to businesses, cities, and states, as well
as billions of dollars in aid directed to health
and medical-related industries.
Included in the CARES Act are certain
22
April 2020
provisions which grant greater access to
bankruptcy relief – but these benefits will
not be available indefinitely. Currently, the
new bankruptcy provisions under CARES
sunset within one year of enactment into
law. Anyone wishing to take advantage
of these new provisions may have to act
quickly.
Under Section 1113 of the CARES Act:
• The Small Business Reorganization Act of
2019 is amended to increase the debt limit
on the eligibility threshold for businesses
filing under new subchapter V of Chapter
11 of the U.S. Bankruptcy Code. Previously,
the debt limit was set at $2,725,625. Under
CARES, the debt limit is now at $7,500,000. 1
• Coronavirus-related funds disbursed
to individuals by the federal government
are excluded from the calculation of one’s
current monthly income for purposes of
Chapter 7 and 13. 2
• Coronavirus-related funds disbursed to
individuals by the federal government shall
not be included for purposes of determining
disposable income in a Chapter 13
confirmation plan. 3