Judicial Conf. Recommends Tolling Bankruptcy Time Periods During Covid-19 crisis.
On April 28, 2020 the Judicial Conference of the United States sent a letter to various committees in the U.S. House of Representatives and the U.S. Senate, seeking both additional appropriations of $36.6 billion for the Judicial Branch related to the ongoing impacts of COVID-19 and legislative amendments to address the COVID-19 impact on the federal judiciary.
The Conference’s letter requested an amendment to the Bankruptcy Code that would provide bankruptcy courts with the authority to extend and toll statutory deadlines and time periods during the COVID-19 national emergency, “where there is currently no flexibility to do so in either the Bankruptcy Code or other federal statutes.” (Ltr. 24.)
Specifically, the proposed legislation would be operative during a newly defined “covered emergency period,” which would be the period beginning on the date on which the President declared a national emergency under the National Emergencies Act (50 U.S.C. § 1601 et seq.) with respect to the Coronavirus Disease (COVID-19) and ending on the date which is 30 days after the date on which the national emergency declaration terminates.”
During this “covered emergency period” the chief judge of a bankruptcy court will be authorized to make a determination that the national emergency will materially affect the functioning of a particular bankruptcy court. If such a determination is made, then the chief judge may extend or toll provisions of title 11, which requires a party to take an action, to file a motion, to commence a proceeding or creates or sets forth a time period that ends or expires by operation of law.
The chief judge may authorize any other judge in the district to extend or toll such deadlines for a period of time not to exceed the duration of the emergency declaration in either a “case” or a “proceeding.”
Noteworthy: Debtors which are commercial tenants are likely to argue that this proposed legislation supports their requests now pending in various bankruptcy cases asking the courts to grant an extension under other available legal theories. This Letter may thus bear on the pending motions in cases such as Pier 1 or Modell’s. The letter contains a statement that there is currently no flexibility to do so in either the Bankruptcy Code or other federal statutes. (Ltr. 24). However, the Letter may be argued as confirming that there is a strong justification for courts finding that there is a legitimate need to toll or suspend such time periods, which may well include the obligation to “timely” perform all obligations under a commercial lease.