Businesses in Financial Hardship Should Consider Whether or Not to File for Bankruptcy

The economic crisis resulting from the COVID-19 pandemic has dramatically impacted the financial well-being of many businesses. Although federal and state programs and loans offer some relief, many businesses are finding themselves stretched to their financial breaking point due to government ordered closures and other adverse consequences. As a last resort, an increasing number of companies are considering whether filing for bankruptcy may be a solution to their financial problems.

We here at Rosenn, Jenkins & Greenwald, L.L.P. have considerable experience in representing businesses confronting economic hardship and considering whether to file for bankruptcy. If you own or operate a company currently in financial hardship, feel free to contact Thomas J. MacNeely, Esquire (tmacneely@rjglaw.com) to discuss your options and whether a bankruptcy filing is right for your company.

Application and Instructions for PPP Loan Forgiveness Published by SBA

The Small Business Administration (the “SBA”) recently published the “Paycheck Protection Program Loan Forgiveness Application” (the “Application”), as well as instructions associated with the Application (the “Instructions”). Taken together, the Application and the Instructions provide important guidance which borrowers who have received a PPP Loan should be aware of in order to obtain the loan forgiveness provided by the Paycheck Protection Program.

The attorneys at Rosenn Jenkins & Greenwald are regularly monitoring the PPP Loan guidance and regulations issued by the SBA and the U.S. Department of Treasury in order to assist clients in administering their PPP Loans and obtaining available loan forgiveness. Please contact Jim Valentine (jvalentine@rjglaw.com) or Kieran Casey (kcasey@rjglaw.com) if you have questions or require any assistance related to a PPP Loan.

Adopt a Formal COVID-19 Response Plan to Ensure Your Business is Prepared to Resume In-Person Operations During the “Yellow” Phase

As businesses prepare for their respective counties to reopen in accordance with Governor Wolf’s Process to Reopen Pennsylvania, owners should closely review the guidance issued by the Commonwealth concerning the requirements that must be addressed as businesses resume in-person operations during the “Yellow” phase. To effectively comply with such requirements, businesses should adopt a formal COVID-19 Response Plan that outlines how the business will address those requirements, including the designation of a “Pandemic Safety Officer” for the business and the posting of required notices at the place of business.

Rosenn, Jenkins & Greenwald, LLP is prepared to assist businesses in adopting a Response Plan in preparation for resuming in-person operations in the “Yellow” phase. Please contact Paul T. Rushton, Esquire (prushton@rjglaw.com) or Christyan A. Telech, Esquire (ctelech@rjglaw.com) if you are interested in learning more about these services.

New Guidance Issued about “Good Faith” Certification Requirement for PPP Loans

In submitting an application for a Paycheck Protection Program (a “PPP Loan”), applicants were required to certify in good-faith that receipt of the PPP Loan was “necessary to support” their “ongoing operations.” The manner in which the Small Business Administration (the “SBA”) will review whether or not such certifications were made in good faith is a topic of ongoing concern among PPP Loan recipients. Yesterday, May 13th, the SBA, in consultation with the U.S. Department of Treasury (“DOT”), indicated that “any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification” … “in good faith.” The SBA also indicated that, in the event it determines a borrower which received PPP Loans in an amount greater than $2 million did not make the required certification in good faith, it will provide such borrower the opportunity to repay the PPP loan and “will not pursue administrative enforcement or referrals to other agencies based on” such determination if the borrower does repay the PPP Loan.

The attorneys at RJG are regularly monitoring the PPP Loan guidance issued by the SBA and the DOT in order to assist clients in administering their PPP Loans and obtaining available loan forgiveness. Please contact Jim Valentine (jvalentine@rjglaw.com) or Kieran Casey (kcasey@rjglaw.com) if you have questions or require any assistance related to PPP Loan related issues.

Business Interruption Insurance – Does your Policy Contain a Virus and Bacteria Exclusion?

Many businesses carry what is known as business interruption insurance as part of their insurance coverages. A number of these policies contain an exclusion for loss caused by a virus or bacteria, and insurance companies are relying on this exclusion to deny coverage for financial losses caused by the need to shut down a business during the pandemic and the resulting governmental orders. Some insureds are challenging the virus exclusion, and there are some legislative efforts underway to require insurers to provide coverage for business interruption, even if the applicable policy contains the exclusion. However, it is important to know that some business interruption insurance policies do not contain this exclusion, and yet some insurance companies are denying coverage.

If your company has suffered a business interruption loss due to the current shut down orders, it is critically important that you review your business interruption insurance policy to determine whether or not it contains the virus and bacteria exclusion. If your policy does not contain such an exclusion, contact Attorney Rick Russo (rrusso@rjglaw.com) or one of the other insurance bad faith attorneys at Rosenn Jenkins & Greenwald.

“Remote Online Notarization” Authorization is Now Temporarily in Effect

The Pennsylvania Legislature recently passed, and Governor Wolf signed, a temporary law allowing for Pennsylvania notaries to notarize documents without the signer being in the physical presence of the notary (as is normally required). This temporary “Remote Online Notarization” authorization will expire sixty (60) days after the termination of Governor Wolf’s COVID-19 disaster emergency. The Remote Online Notarization occurs through the use of audio/video technology using a computer or tablet with a microphone and camera. RJG paralegals have applied for, and are now able to, remotely notarize documents pursuant to this temporary law. Therefore, if you need to have a document notarized in this difficult time, please contact Tom MacNeely, the Chair of our Real Estate Practice Group (tmacneely@rjglaw.com), to make the necessary arrangements to have those documents notarized via Remote Online Notarization.

If you Received a PPP Loan, Ensure you are Complying with the Applicable Guidance and Regulations

Businesses and non-profit organizations which have received a loan under the Paycheck Protection Program (a “PPP Loan”) must comply with a series of guidance and regulations, including employee retention and compensation maintenance requirements, in order to obtain the loan forgiveness provided by the Program. The attorneys at Rosenn Jenkins & Greenwald are regularly monitoring the PPP Loan guidance and regulations issued by the Small Business Administration and the United States Treasury Department in order to assist clients in administering their PPP Loans and obtaining available loan forgiveness. Please contact Jim Valentine (jvalentine@rjglaw.com) or Kieran Casey (kcasey@rjglaw.com) if you have questions or require any assistance related to PPP Loan forgiveness, or any other issues related to the administration of PPP Loans.

The Small Business Administration has Resumed Processing Economic Injury Disaster Loan Applications

The Small Business Administration (“SBA”) has resumed processing loan applications filed under its popular Economic Injury Disaster Loan (“EIDL”) program. The SBA previously announced that it was no longer processing EIDL applications, as funding for the program had lapsed. Applications that were previously submitted to the SBA will be processed on a first-come, first-served basis. At this time, the only new EIDL applications that will be accepted are those filed by agricultural businesses. However, it is anticipated that the SBA may reopen the EIDL program for new applications from other sectors in the future.

If you require assistance with a pending EIDL application or are interesting in submitting an EIDL application, please contact Paul T. Rushton (prushton@rjglaw.com) or Christyan A. Telech (ctelech@rjglaw.com) of our Business & Finance Department.

Attention Creditors: If a Debtor Owing You Money Files for Bankruptcy, We’re Here to Protect your Rights.

There is no doubt that the coronavirus has caused severe economic pain and anxiety to both individuals and businesses throughout Pennsylvania. Unfortunately, many financial experts believe that these current economic conditions will cause many businesses to default on their financial obligations causing them to file for bankruptcy protection. In turn, the creditors of these businesses will be forced to protect their rights in bankruptcy court to ensure that they are treated appropriately under the Bankruptcy Code.

Rosenn, Jenkins & Greenwald has considerable experience in protecting the rights of creditors who find themselves having to defend their claims and rights in bankruptcy court. For many years, we have represented (i) banks and lending institutions whose customers are no longer able to pay their mortgages, (ii) manufacturers whose customers owe them for the products they purchased, (iii) commercial landlords whose tenants have defaulted under their leases, and (iv) professionals whose clients are unable to pay for their services.

In each of these cases, we have the requisite knowledge and experience to aggressively and economically represent creditors who are involved in bankruptcy cases filed by their customers, vendors, tenants or clients. If you find yourself in the unenviable position of needing legal representation caused by a bankruptcy filing, please contact Thomas J. MacNeely, Esquire at 570-826-5662 or at tmacneely@rjglaw.com to discuss your legal rights and options.

How to Use the Proceeds from a Paycheck Protection Program Loan Correctly to Facilitate Maximum Loan Forgiveness

The Paycheck Protection Program (“PPP”) included in the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) became law on Friday, March 27, 2020. The PPP is designed to allow the Small Business Administration (“SBA”) to make loans through certified lenders to small businesses, 501(c)(3) nonprofit organizations, independent contractors and certain other entities. If used appropriately, these loans may become forgivable up to 100% of the principal amount borrowed. Although the SBA is not currently accepting new applications for the PPP, more funding may become available in the near future.

If your business received a loan through the PPP, it is important to utilize the proceeds for “covered costs”, i.e. payroll costs, rent, utilities, and interest. Pursuant to Section 1106 of the CARES Act, a recipient is eligible for forgiveness of indebtedness if the loan proceeds are used for covered costs within the 8 week period following receipt of funds. At least 75% of the loan proceeds must be spent on payroll costs to maximize loan forgiveness. Furthermore, in order to use any of the loan proceeds on rent, utilities or interest, those obligations must have existed prior to February 15, 2020. Importantly, for rental obligations, this means there was a lease in force before February 15, 2020.

If your business received funding through the PPP and require assistance in ensuring the proper use of those funds or you are interested in apply for a PPP loan, we can help. Please contact Attorney Tom MacNeely at tmacneely@rjglaw.com or Attorney Zachary Berger at zberger@rjglaw.com of our Real Estate Department to learn more about these services.