Extensions of CARES Act Provisions By COVID-19 Bankruptcy Relief Extension Act of 2021

The CARES Act, Public Law 116-136 had amended several parts of the Bankruptcy Code, but included sunset provisions terminating March 27, 2021. The COVID-19 Bankruptcy Relief Extension Act of 2021, H.R.1651, passed by the House and Senate and signed by the President on March 27, 2021, extended some provisions for another year.

Section 1113 of the CARES Act had amended Bankruptcy Code § 1128(1), primarily to increase the debt limit for a small business debtor to $7,500,000, with a one-year sunset, after which the debt limit would revert to $2,725,625. The 2021 Act extended the sunset applicable tothat debt limit increase from one year to two years, i.e., to March 27, 2022.

Section 1113 of the CARES Act also amended sections of the Bankruptcy Code concerning Chapter 13, with a one-year sunset, and the 2021 Act extended that sunset for an additional year. This extension affects Bankruptcy Code § 101(10A)(B)(ii)’s exclusion of payments related to COVID-19 from current monthly income, and the modification of confirmed Chapter 13 plans. The date of confirmation had been measured by plans confirmed prior to enactment of CARES, but enactment of the 2021 Act is substituted for that trigger date. Therefore, Chapter 13 plans may be subject to modification and potential extension up to seven years, provided they were confirmed prior to enactment of the COVID-19 Bankruptcy Relief Extension Act of 2021 by Congress on March 27, 2021. Other qualifying elements for plan modification under the CARES Act were not changed by the 2021 Act.

The COVID-19 Bankruptcy Relief Extension Act of 2021 did not extend other sunset dates expiring December 27, 2021, that were part of the Consolidated Appropriations Act of 2021.

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