The business, economic and financial fallout from the COVID-19 pandemic cannot be understated. While our families, friends, and clients are adjusting to these difficult, uncertain and stressful times – protecting our families, friends and communities from the spread of the virus, working from home, avoiding public spaces, and social distancing – businesses large and small are suffering from shutdowns, closures, breaks in supply chains, and the loss of business and revenue.
At a time when distressed situations will undoubtedly increase, it is logical, and reassuring, that Bankruptcy Courts will remain open for business in order to provide relief for troubled companies. The procedures may differ as many Bankruptcy Courts have implemented changes in order to address concerns raised by the potential spread of the virus. In this vital way, the Courts will continue to function uninterrupted.
Take for example the extremely active Delaware Bankruptcy Court. The Court entered an order confirming that all hearings, status conferences, trials, and other matters scheduled to be held in open court that are not time sensitive (as determined by the presiding judge on a case by case basis) will be postponed until after April 15, 2020. Hearings which are necessary prior to April 15, 2020 will be held telephonically or by video conference. Everyone involved in any way in pending bankruptcy cases should assume that their matter is going forward, presumably telephonically, and should be prepared accordingly. The United States Trustee is conducting telephonic organizational meetings of creditors’ committees. (To track further COVID-19 updates from the Delaware Bankruptcy Court, visit: https://www.deb.uscourts.gov/covid-19).
A quick survey of some recently filed larger bankruptcy cases, such as Pier 1 Imports, Houlihan’s Restaurants, and Bluestem Brands, only reinforces this message of caution. Bar dates for the filing of proofs of claim are not being extended and are rapidly approaching. Many key hearings, such as those to approve the rejection of leases or to approve asset sales, are not being postponed. Deadlines imposed by the passage of time, such as objections to motions or answers to complaints, are not being continued to later dates. Failure to vigilantly monitor these cases and be prepared in real time to respond can have negative consequences.
As businesses and lenders adapt to this new normal caused by the COVID-19 global pandemic, bankruptcy cases will continue to be filed and work their way through the system. Bankruptcy courts across the country will use technology to continue to operate throughout these challenging times. If you are involved or become involved in a bankruptcy case, do not assume that the bankruptcy world will hesitate or stop – stay in constant contact with your professionals to protect and preserve all of your rights and remedies.
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