Day: June 3, 2020

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AABANY Co-Sponsors: COVID-19: Relief for Small Businesses Webinar Series Part 2 (Bankruptcy and Restructuring)

On May 28, the Asian American Bar Association of New York (AABANY) co-sponsored “COVID-19: Relief for Small Businesses Webinar Series Part 2” as part of a series dedicated to helping small businesses mitigate financial losses in light of COVID-19. The presentation discussed the various economic relief packages passed under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), including the Payroll Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL), as well as how Chapter 11 bankruptcy and the Small Business Reorganization Act can help small businesses ensure long-term financial stability. The webinar featured William Hao, Counsel at Alston & Bird with extensive experience in bankruptcy, litigation, and out-of-court restructuring and Treasurer of the AABANY Board. The presentation was moderated by William K. Lee, an associate at Alston & Bird LLP and AABANY member.

The presentation began by addressing the various relief packages currently available to small business owners, specifically those regarding eligibility requirements and application information. Small businesses need to submit their payroll processing records, tax filings, Form 1099-MISC, and other supporting documentation to be eligible to receive the PPP principal loan. The loan amount will be the lesser of either $10 million or 2.5 times the average monthly payroll based on 2019 annual statistics. The deadline for PPP loans is June 30, 2020 but will likely be extended for the next round of funding. As for EIDLs, eligible small businesses must have suffered economic injury in connection with COVID-19 and have an acceptable credit history that demonstrates an ability to pay back loans. Businesses may receive a principal loan amount of up to $2.5 million that can only be used to pay for expenses the businesses would have paid for even if the disaster had not occurred with an interest rate of 3.75%.

The presentation also discussed how filing for Chapter 11 bankruptcy could help small businesses reduce debt, restructure certain obligations, and come out of bankruptcy a more financially stable company. Filing for Chapter 11 bankruptcy allows owners to retain ownership of their businesses by restructuring their internal operations and finances, while incentivizing creditors to negotiate a more favorable reorganization plan. However, heavy legal expenses and other administrative requirements have traditionally blocked smaller businesses from being able to file for Chapter 11 bankruptcy. Under the Small Business Reorganization Act, many of the barriers that have deterred small businesses from filing Chapter 11 bankruptcy have been removed by allowing small businesses to qualify as Subchapter V debtors. By filing under Subchapter V, small businesses would not need to incur the significant legal expenses associated with forming a creditors’ committee, paying the appointed trustee, and filing for a disclosure statement. In addition, the Small Business Administration has raised the aggregate noncontingent, liquidated debt limit from $2,725,625 to $7,500,000, and has expedited the process for filing Chapter 11 bankruptcy.

The discussion also provided guidance on the process of filing for Chapter 11 bankruptcy. Small business owners should seek out a lawyer to help prepare and file a petition along with other potential filings such as an initial affidavit. An automatic Subchapter V trustee is appointed upon filing the petition and will formulate a plan to address outstanding debts. 

Debtors should also prepare for court appearances such as Section 341 meetings, during which creditors can come and ask questions regarding company finances and status conferences between all parties to discuss progress toward developing a restructuring plan. These plans must contain a brief history of the business operations of the debtor; an analysis of how much money the company is worth if all of its assets were immediately liquidated; a valuation of future profitability if the company was allowed to continue operating; and any relevant forms. Plans must also outline how to manage and pay various classes of claims and interests including administrative expenses, priority claims, secured claims, general unsecured claims, and equity interests. Secured creditors can be paid over time and can be paid at a potentially lower interest rate whereas unsecured creditors must complete repayment within five years and all income not allocated for the maintenance of the company and basic personal living expenses of the debtor will be applied to make payments. If the plan is mutually agreed upon by all parties, the debtor will pay regular installments to creditors and any liability for debts is waived upon confirmation of the plan. If the plan is nonconsensual, the appointed trustee will make regular payments on behalf of the debtor, and liability is waived upon the completion of payments.

We thank William Hao and William Lee at Alston & Bird for helping to organize this webinar series and for their demonstrated commitment to helping small business owners affected by COVID-19. To learn more about AABANY’s Commercial Bankruptcy & Restructuring Committee, visit https://www.aabany.org/page/353. For any specific details, please refer to the video above.

If any attorneys would like to volunteer with AABANY to assist small business owners adversely affected by COVID-19, please contact [email protected].

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AABANY Co-Hosts Webinar on Employment, Labor, and Safety Issues Related to Returning to Work During COVID-19

On May 27, 2020, the Labor & Employment Law Committee of the Asian American Bar Association of New York (AABANY) co-sponsored an event with Littler and Alston & Bird–Silver-level sponsors of AABANY–addressing safety guidelines for returning to work during the pandemic. The presentation highlighted a variety of topics including re-opening guidelines for different industries, Paycheck Protection Program (PPP) loans, and various sick leave laws.

The webinar featured panelists Yoojin Deniro, Co-Chair of the Labor & Employment Committee of AABANY and Counsel at Advance Publications Inc., and William Ng, a Shareholder at Littler and founding Co-Chair of the Labor & Employment Law Committee. The event was moderated by William Lee, an Associate at Alston & Bird and AABANY member.

To begin, Yoojin Deniro explained that prior to re-opening, businesses must submit a Business Affirmation online and develop and post a Business Safety Plan, which must be retained on the premises and made available to the New York State Department of Health in the event of an inspection. The Business Safety Plan requires guidelines for physical distancing, protective measures (e.g.. providing face coverings to employees at no cost), hygiene and cleaning, communication, and health screenings. 

Next, William Ng discussed how individuals and businesses can make the most of PPP loans. The Paycheck Protection Program Flexibility Act, which is still pending before the Senate, is a bipartisan effort to fix problems with the PPP. If passed, the Act will allow forgiveness for expenses beyond the eight-week covered period; eliminate restrictions limiting non-payroll expenses to 25% of loan proceeds; remove limitations that constrain loan terms to two years; ensure full access to payroll tax deferment for businesses that take PPP loans; and extend the rehiring deadline to offset the effect of enhanced unemployment insurance.

In order to maintain a safe place to work, the panelists recommended that employers safely conduct temperature checks, which are permitted under the Americans with Disabilities Act’s (ADA) “direct threat” exemption. Temperature checks should be conducted by a trained and authorized individual with proper PPE, and symptomatic employees should be sent home in accordance with ADA confidentiality requirements. Employers are also urged to adopt other health screening protocols, including COVID-19 testing and creating health questionnaires. Moreover, employers must provide employees PPE at no cost, and offer necessary accommodations for employees with disabilities. Finally, individuals must continue to practice social distancing in the workplace and develop a comprehensive exposure control plan. Under the Occupational Safety and Health Act (OSHA) of 1970, any confirmed cases of COVID-19 or other illnesses and injuries must be recorded.

The panelists also reviewed various sick leave laws, including the Families First Coronavirus Response Act (FFCRA), which provides Emergency Paid Sick Leave (EPSL) and Emergency Family Medical Leave Act (FMLA) benefits for employees unable to work due to quarantine or isolation orders related to COVID-19. The FFCRA also offers exemptions for small businesses with fewer than 50 employees. New York State has also instituted Paid Family Leave, which grants paid leave for employees who must provide care for a minor dependent subject to a quarantine order. New York City offers Paid Safe and Sick Leave for employers whose business closed due to a public health emergency or who must care for a child whose school or child care provider closed due to a public health emergency. Lawmakers are also in the process of passing statewide New York Paid Sick Leave, which will apply to all employers and vary depending on the size and net income of the employer. Furthermore, in accordance with the ADA, employees can leave or request remote work if they engage in “cooperative dialogue” with their healthcare provider. Employer-specific policies also include Paid Time Off (PTO), sick leave, and personal or unpaid leave. 

We thank our colleagues at Alston & Bird and Littler for co-sponsoring and organizing this informative event with the Labor & Employment Law Committee of AABANY. We also thank the presenters, Yoojin Deniro and William Ng, and the moderator, William Lee, for their time. For more information on the Labor & Employment Law Committee, see https://www.aabany.org/page/398. If you are interested in volunteering with AABANY to assist with small businesses that have been adversely affected by COVID-19, please contact [email protected].

To watch a recording of the presentation, see the video above.

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MNAPABA and NAPABA Stand in Solidarity with the Black Community

The Minnesota National Asian Pacific American Bar Association (MNAPABA) and the National Asian Pacific American Bar Association (NAPABA) released the following statement on June 2, 2020:

“The events of the past few weeks—the deaths of George Floyd, Ahmaud Arbery, and Breonna Taylor, as well as numerous incidents of explicit bigotry, bias, and brutality—are nothing less than disturbing and heartbreaking. The Minnesota Asian Pacific American Bar Association (MNAPABA) and the National Asian Pacific American Bar Association (NAPABA) stand in solidarity with our Black neighbors in the Twin Cities and beyond.

We demand change. When there is an imbalance of power, our position as members of the Bar and our understanding of the rule of law makes it even more critical that we stand strong against any form of injustice. We recognize the generational failures of our government and criminal justice systems in protecting the Constitutional and human rights afforded to Blacks. 

We must address deeply rooted racism in our society. We must work to create trust and fairness in our legal system by addressing systemic bias in the law to safeguard civil rights, civil liberties, and justice for all individuals regardless of race, ethnicity, disability, gender, gender identity, sexual orientation, religious background, or immigration status.

MNAPABA and NAPABA stand in solidarity with the Minnesota Association of Black Lawyers (MABL) and the National Bar Association (NBA) as they seek justice and reform at a local and national level. We stand in unity with our affiliated Asian Pacific American bars and sister bar associations in speaking out against racism in all its forms.”