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Chairman Nadler Applauds House Passage of Legislation to Extend CARES Act Bankruptcy Relief Provisions

Bipartisan 'COVID-19 Bankruptcy Relief Extension Act’ extends bankruptcy relief provisions until March 27, 2022

Washington, March 17, 2021

Washington, D.C. - Today, the House of Representatives passed H.R. 1651, the COVID-19 Bankruptcy Relief Extension Act of 2021, legislation introduced by House Judiciary Committee Chairman Jerrold Nadler (D-NY) that extends the temporary bankruptcy relief provisions granted by the CARES Act for an additional year. The bill passed by a bipartisan vote of  399-14.

Chairman Nadler issued the following statement after the House passage of H.R. 1651:

“I am proud that my colleagues on both sides of the aisle voted to pass my legislation, the COVID-19 Bankruptcy Relief Extension Act, which extends vital COVID-19 bankruptcy relief provisions for an additional year. This urgently needed bill ensures that families and small businesses do not lose access to these economic lifelines, keeping more families in their homes and allowing more small businesses to thrive. Extending these necessary protections until March of next year will also provide much-needed certainty that the bankruptcy system will remain responsive to debtors and creditors alike during this extraordinarily disruptive crisis. I urge the Senate to take up this bill swiftly and send it to the President’s desk.”

The COVID-19 Bankruptcy Relief Extension Act of 2021 extends bankruptcy relief provisions enacted in the CARES Act of 2020 and the December 2020 omnibus appropriations bill until March 27, 2022. These provisions do the following:

  • Allow more small businesses to file for streamlined Chapter 11 bankruptcy proceedings under the Small Business Reorganization Act of 2019 by increasing the maximum debt limit for those procedures from $2.7m to $7.5m.
  • Amend the definition of income for Chapters 7 and 13 (which govern individual bankruptcy filings) to exclude federal COVID-related relief payments from being treated as “income” for purposes of filing bankruptcy. 
  • Clarify that the calculation of disposable income for purposes of confirming a Chapter 13 plan does not include COVID-related relief payments. 
  • Permit individuals and families in Chapter 13 to seek payment plan modifications for plans confirmed before the date of enactment of this extender bill if they are experiencing a material financial hardship due to the coronavirus pandemic. 
  • Provide that federal COVID relief payments to individuals are exempt from being treated as property of the estate in bankruptcy proceedings. 
  • Ensure that families in Chapter 13 bankruptcy plans who have made all plan payments but have missed 3 or fewer mortgage payments because of the pandemic are not denied a discharge for their other debts (though the mortgage payments would continue to be owed). 
  • Ensure that families that are or were in bankruptcy proceedings are not ineligible from CARES Act mortgage forbearance and eviction moratorium provisions. 
  • Set forth a process for creditors to file a proof of claim for payments deferred during forbearance periods granted under the CARES Act, and to permit modification of a chapter 13 plan to account for such proofs of claim. 
  • Prevent the termination of utility services in bankruptcy by ensuring that individuals and families will not be required to furnish a security deposit to maintain utility services during bankruptcy. 
  • 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.
Full text of Chairman Nadler's floor statement in support of H.R. 1651 is available here.