The Credit Effects of Foreclosures and Short Sales A mortgage is a secured debt, meaning that you can’t just decide not to pay and to walk away. If you fall behind on your payments, for any reason, the bank has the right to sell the property and recoup whatever value it can. That is the foreclosure process. The bank seizes your property and sells it at auction, trying to get as much as it can to cover what you still owe on the loan.  As a Mesa bankruptcy law office, My AZ Lawyers is very familiar with this process. If you fall behind on your mortgage and can’t pay it, you may decide to just let your home fall into foreclosure. You may even stop trying to pay anything, knowing that the inevitable will come. You know that you will take a hit to your credit, but you may not feel that you have any other options.  Alternately, you may decide to take a more proactive approach and sell the house yourself before the foreclosure process can start. Yet, if you owe more than the house is worth, you may feel stuck. A short sale may help. With a short sale, you sell the house at a loss, and then you file a short sale request with the bank, indicating your financial hardship. The bank may agree to do so in order to get what it can, knowing that you are unable to pay. In most cases, you would not be responsible for the difference between the sale and the loan amount.  Impact on Your Credit Score Exactly how a short sale or foreclosure will impact your credit score depends on a number of factors, including your credit history, how many payments you missed on the mortgage or how many payments you were late, the status of your other credit accounts, the amount of your debt, and so on.  Typically, reports have shown an average drop in credit scores of anywhere from 150 to 300 points for both foreclosures and short sales. There is debate over whether foreclosure or short sale has a bigger impact, with people in both camps saying that one is better than the other. Reports of when you can apply for traditional financing after a foreclosure or short sale range anywhere from two to four years.  Filing for Bankruptcy Filing for bankruptcy in Phoenix may be another option if you are falling behind on your house payments or want to get out of your debt. Which chapter of bankruptcy you file depends on your finances and your goals. For example, if you don’t want to keep your house, you can file for Phoenix Chapter 7 bankruptcy if you meet the income guidelines. You would relinquish the house, and any remaining debt would be discharged, as well as your unsecured debt.  If you want to keep your house, and it has not already entered the foreclosure process, you can file for Phoenix Chapter 13 bankruptcy and get your debt reorganized. The amount you owe on your mortgage can be included in your debt repayment plan, which lasts for three to five years. You may be able to catch up on what you owe and save your home. You will also get your other debt under control, as you will have a single, affordable monthly payment. Debt that remains at the end of the repayment term may be discharged.  Besides helping you get debt relief, an advantage of bankruptcy is that it doesn’t have the same impact on your credit as a foreclosure or a short sale. You’ll still see a drop in your credit score, but on average, it won’t be as bad as it would have been with a foreclosure or short sale. You’ll be able to rebuild your credit more quickly.  If you are struggling to pay your mortgage or other debts, talk to My AZ Lawyers about how bankruptcy might help you. Our experienced bankruptcy attorneys will carefully review your finances and help you understand how each chapter of bankruptcy can impact you. We’ll help you find the best option to get the maximum debt relief and to meet your goals, whether that is to keep your house or other assets. Call in Phoenix today to meet with a bankruptcy lawyer and learn about your options for debt relief.  Arizona Offices: Mesa Location: 1731 West Baseline Rd., Suite #100 Mesa, AZ 85202 Office: (480) 448-9800 Email: info@myazlawyers.com Website: https://myazlawyers.com/ Glendale Location: 20325 N 51st Avenue Suite #134, Building 5 Glendale, AZ 85308 Office: (602) 509-0955 Tucson Location: 2 East Congress St., Suite #900-6A Tucson, AZ 85701 Office: (520) 441-1450 Avondale Location: 12725 W. Indian School Rd., Ste E, #101 Avondale, AZ 85392 Office: (623) 469-6603 The post The Credit Effects of Foreclosures and Short Sales appeared first on My AZ Lawyers.

 https://www.nydailynews.com/new-york/ny-tlc-taxi-medallion-oversight-20201015-2pyve3pmfreuvfsii6mpjh43ta-story.htmlOriginally appeared on NY Daily NewsNew York City Council members hope a new office within the Taxi and Limousine Commission will keep taxi medallion owners from being taken for a ride.The Council on Thursday will vote on a bill to establish a new “Office of Financial Stability” within the TLC designed to keep tabs on the health of the city’s crumbling yellow cab industry.  Bronx Councilman Ritchie Torres, the bill’s sponsor, said he wanted to prevent a repeat of history when the city sold medallions or approved medallion sales at prices of $1 million and more.  The new office would give the TLC a “statutory obligation to oversee and regulate the financial stability of the medallion market,” Torres said.Medallions give yellow cabs the exclusive right to street hails in most of the city — but their value began to plummet in 2012 when Uber and other e-hail companies arrived in New York. Many medallion owners took out home loans or refinanced against their medallions — and are now drowning in insurmountable debt. The COVID-19 pandemic made things even worse, causing yellow cab ridership to fall by 92% in June from the same month of 2019.  The Office of Financial Stability — which would open in November 2021 — won’t necessarily help cabbies who are now underwater, but it should prevent others from a similar fate, Torres said. “We cannot afford to have the TLC auction off medallions at speculative prices,” said Torres. “We cannot allow the TLC to approve medallion transfers with speculative loans.” With the majority of ride hails in New York being taken by Uber and Lyft, it’s unclear if the medallion values will ever rebound to sky-high levels. But Torres — the Democratic nominee for New York’s 15th Congressional district in the Bronx — said he was concerned by the “growing presence of private equity" in the medallion market, including MarbleGate, a Connecticut-based firm with roughly 4,000 New York taxi medallion loans in its portfolio. “I do not take for granted that there could never be a medallion bubble again,” said Torres. “I hope for the best but I prepare for the worst.”     

FILING A CHAPTER 7 BANKRUPTCY IN PHILADELPHIA One of the biggest questions that people ask themselves when they are in financial trouble and contemplating filing for bankruptcy is “which of my property will I be able to keep?” Bankruptcy filings can allow you to protect certain personal assets from creditors that would otherwise be lost. […] The post Which of My Property Would Be Safe from Liquidation in a Chapter 7 Bankruptcy in Philadelphia? appeared first on .

Originally appeared on Baltimore Business Journal Filing for bankruptcy protection may seem taboo to small business owners, but a relatively new and little-known program could prove to be the difference between surviving the Covid-19 pandemic or closing for good. The flood of bankruptcies that many economists, lawyers and accountants expected has not transpired. While several large companies in the retail industry have filed for Chapter 11 bankruptcy — J.C. Penney, Neiman Marcus and Brooks Brothers to name a few — most small businesses have held off as they try to tread water. Small businesses have typically not filed Chapter 11 bankruptcy because the reorganization process associated with doing so tends to be costly and take a lot of time. If businesses don't have enough cash for reorganization, creditors will push them to liquidate. However, for many small businesses the clock is getting closer to striking midnight as the federal stimulus money dries up and the coronavirus pandemic continues to persist. Despite what President Donald Trump says, medical experts don't expect a vaccine to be widely available until 2021. A law passed by Congress last year that went into effect in February provides small businesses with a lifeline: a new section of Chapter 11 known as Subchapter V, which involves a more timely and less costly reorganization process. Subchapter V was created to provide an option for businesses with $2.7 million or less in debt. It prevents creditors from proceeding with collections, guarantees a reorganization plan is filed within 90 days and waives quarterly bankruptcy trustee fees. Congress raised the debt limit to $7.5 million when it passed its coronavirus relief package, known as the CARES Act, in March. "It was pure luck that we have such a useful tool that came out right when this [pandemic] happened," said Vadim Ronzhes, a tax consultant at Rosen, Sapperstein & Friedlander in Towson. Accountants and attorneys have traditionally recommend against filing for Chapter 11 in the past because of how difficult it can be to get a reorganization plan approved, Ronzhes said. With Subchapter V it's a much easier and quicker process, he said. During the proceedings, a business may continue to pay expenses such as employees wages and benefits while it develops a plan for paying off creditors, Ronzhes said. "The whole goal is to make sure that the business is operational and that you're able to continue supporting the community that you're operating in and make sure your employees are getting paid," Ronzhes said. "That is definitely one of the biggest benefits." Another benefit is that the company can bring on new investors or owners. In the current operating environment with all-time low interest rates, Ronzhes said outside investors are looking to provide debt or investment capital. Perhaps most important, Ronzhes said, is that the Subchapter V process brings all creditors to the table to come up with a plan for paying off debt. Everyone does not have to approve of the plan, but at least all parties will have been a part of the conversation, he said. During the pandemic many small business owners have complained about the challenges of working with landlords who are unwilling to rework leases. The Subchapter V process can force those landlords to come to the table while allowing the business to remain operational instead of being forced to close. There are downsides to filing for bankruptcy though. For one, it will negatively impact credit ratings. Filing for bankruptcy also carries a negative stigma. But in the current economic situation brought on by the pandemic, Ronzhes said the good more than likely outweighs the bad. "If you have multiple debtors and one person decides to file suit and take money out of your bank account through levies, that could end an organization," Ronzhes said. "As soon as you start paying employees, they're not showing up. This is a way to reorganize and I think it's going to be used a lot by businesses to give themselves breathing room." One industry that won't be helped is real estate, Ronzhes said. Real estate firms are usually structured by having separate limited liability companies for individual properties. Those LL Cs won't be able to file for Subchapter V protection because the overall organization may still be profitable.

   Another important chapter 13 case involving a post-petition sale of a home for $11,000 net proceeds in excess of Colorado's $75,000 exemption in a chapter 13 when home had no nonexempt equity in filing was involved in  In re Baker, 2020 Bankr. LEXIS 2771, Case No. 17-14041-EEB (Bankr. Colo, 29 Sept 2020).  In ruling that the debtor could retain the proceeds of the sale rather than being forced to turn such proceeds over to the trustee, Judge Elizabeth Brown made a detailed analysis of the current law on the issue.  The debtor had filed a motion to modify the plan to cease payments on the mortgage, and the chapter 13 trustee requested that the debtor be required to immediately turnover the $11,000 nonexempt proceeds, and be forced to segregate the $75,000 exempt homestead proceeds and restrict their use to purchase a new home and to turnover the proceeds toward payment of unsecured creditors if the proceeds were not so used within two years of filing.  Debtor initially valued the home at $230,000 subject to a mortgage of $196,131; claiming the $34,131 equity as exempt.  The court presumed that the initial valuation was accurate, and the $86,000 equity at the time of sale was due to post-petition appreciation in the value of the property.  The court noted the relevancy of a number of bankruptcy statutes involved in this determination.  Initially the court examined the fundamental policy in chapter 13 vs chapter 7.  In chapter 7 the debtor loses non-exempt property in exchange for retaining future income.  In chapter 13 the debtor retains the property but contributes future disposable income in an amount to at least cover the amount the trustee would have received in a chapter 7 case.  Any interpretation of the chapter 13 statutes must not blur the fundamental premise that the plan payments substitute for the debtor's property, leaving the debtor with the freedom to threat his property as his own without court intervention at every turn.1  However the Bankruptcy Code also requires debtors to make their best efforts to repay creditors with future income, and §1329(a) provides for modification of a confirmed plan to 1) increase or decrease payments, 2) extend or reduce the length of the plan payments, 3) modify a creditors rights under the plan to account for other payments received by the creditor, or 4) decrease plan payments as necessary so as to allow the debtor to obtain health insurance.  Any modification must satisfy the original confirmation requirements, including the best interest of creditors test of §1325(a)(4) and (2) and the good faith requirement of §1325(a)(3).  §1329(b) does not state a date at which the best interest of creditors is measured, hence resulting in a number of courts determining that it is measured as of the date of the modification.   However §1325(a)(4) specifies the the best interest of creditors test is to be applied 'as of the effective date of the plan.'  The legislative history indicates:In applying the standards of proposed 11 U.S.C. § 1325(a)(4) to the confirmation of a modified plan, 'the plan' as used in the section will be the plan as modified under this section, by virtue of the incorporation by reference into this section of proposed 11 U.S.C. § 1323(b). Thus, the application of the liquidation value test must be redetermined at the time of the confirmation of the modified plan.H.R. Rep. No. 595, 95th Cong., 1st Sess. 431 (1977), as reprinted in U.S.C.C.A.N. 5787, 6387.  While this statement could be interpreted to support the determination as of the modification date, it also can be interpreted as requiring the test to be reapplied, but not necessarily with a change in the measuring date.  In a typical modification based on a decrease in income, the test still requires the debtor to pay in at least as much as the trustee would have received in a chapter 7 on the effective date - the testing date for best interest remains the same as the original confirmation determination.  Even if the legislative history is clear courts need not be bound by it, and can expand a statute's literal meaning to accomplish beneficial results, or to serve an act's purpose, or to avoid thwarting a legislative intent apparent from an entire act.2    Instead of stating the tests that apply to modifications, §1329(b) merely incorporates other statutes by reference.  One of these statutes, §1325(a)(4), states that the test is to be applied 'as of the effective date of the plan.'  Thus it should be assumed that the court should apply the same date under §1329(b).  The collier treatise supports the conclusion that the court should not recalculate the best interest test based on property value at the time of modification.[t]he best-interests test turns on what would have happened had the debtor filed a chapter 7 case instead of a chapter 13 case. If a chapter 7 case had been filed, only property of the estate under section 541 would have been available to creditors and not the additional property that became property of the estate under section 1306(a). Therefore, property acquired after the petition, other than the limited types that become property of the estate under section 541, is not relevant to application of section 1325(a)(4) to a proposed plan modification. To hold otherwise, a court would have to find the best-interests test to be a constantly fluctuating standard, subject not only to property coming into the estate and leaving the estate but also to changes in the value of estate property. Indeed, if a case is converted from chapter 13 to chapter 7, property of the estate ordinarily is based on the property the debtor had on the date of the petition, and not the date of conversion. [§ 348(f)(1)] The policy behind this provision, that a debtor should not be discouraged from filing a chapter 13 case by the possibility that property acquired during the case could be lost to creditors who would have no right to it had the debtor initially filed a chapter 7 case, is equally applicable. For similar reasons, the acquisition or liquidation of assets should not be grounds for modification, at least if those assets do not produce additional ongoing income for the debtor.8 Collier on Bankruptcy ¶ 1329.05[3] (Richard Levin & Henry J. Sommer eds.,16th ed. 2019).  To require an increase in payments due to post-confirmation appreciation of property would threaten the very fabric of the chapter 13 bargain. Suppose a debtor owns a house. The §1325(a)(4) test is conducted at the time of the confirmation hearing and the court finds that, given the appraised value of the house, all creditors would receive more from the plan than they would have received in a chapter 7 liquidation. Two years later, however, the house has increased in value. If an unsecured creditor moves to modify, and if the § 1325(a)(4) test is redone, the payments, previously high enough to justify confirmation, no longer suffice. To make the plan work as modified, the debtor would have to liquidate principal, not income. This would be a violation of the basic chapter 13 bargain.Carlson, supra, at 599-600.  The court next examined the trustee's argument under §1306(a)(1), which provides that property of the estate includes all property specified in §541 that the debtor acquires after the commencement of the case, but before the case is closed, dismissed, or converted, which the trustee asserted included post-petition appreciation in the property.  However, §1327(b) provides that except as otherwise provided, confirmation of a chapter 13 plan vests all property of the estate in the debtor.  §1327(c) provides that such property vests free and clear of any claim or interest of any creditor provided for by the plan (except as otherwise provided in the plan or order confirming the plan).   There are a number of interpretations of the meaning of this section in the caselaw.  Judge Brown concluded that the 'estate termination' approach is the best interpretation of the statute.  This interpretation concludes that the estate ceases to exist upon confirmation, and all property of the estate, whether acquired before or after confirmation, becomes property of the debtor.  Judge Brown cited In re Dagen, 386 B.R. 777, 782 (Bankr. D. Colo. 2008) wherein the court found that a creditor collecting pre and post-petition child support from debtor's postpetition income was not in violation of the stay, finding that the estate termination approach was the only interpretation consistent with §362(b)(2)(B) allowing a child support creditor to collect its debt from property that is not property of the estate.  The court concluded that the estate termination approach is the only interpretation that respects the plain meaning of §1327(b).  In §1306(b) the Code already provides that a chapter 13 debtor has the right to possess all property of the estate from and after the date of filing.  Therefore unless the concept of vesting in §1327(b) refers to a transfer of ownership, §1327(b) is rendered meaningless.    This interpretation does not conflict with §1306(a).  Under this interpretation when debtor files chapter both a debtors home and wages become property of the estate under §1306(a) protected by the automatic stay.  On confirmation both the home and wages become property of the debtor again, but continue to be protected by the automatic stay (with narrow excepts set out in §362(b) until the case is closed, dismissed or discharged.  §362(a)(5)-(7), (c)(2).  §1306(a) still plays an important role in bringing those assets under the protection of the automatic stay, and determining what assets must be considered in the best interest of creditors test at confirmation.  §1327(b) on the other hand terminates the estates rights to that property.  The debtor is free to spend his wages and deal with his assets as he wishes, so long as he fulfills his plan obligations.  He should not be required to seek court approval to trade in his car or obtain a home-equity line of credit to repair his plumbing.  The plan is the only contract between the debtor and his prepetition creditors.   An increase in income may require a modification of this contract, not because of §1306(a), but because Congress expressly provided for the adjustment to reflect changes in the debtor's financial circumstances, and does so not by changing ownership of the wages but by by increasing the payment obligation - ie granting unsecured creditors an in personam remedy, not an in rem remedy. The interpretation is also consistent with the definition of vest in §1141(b), which has been consistently interpreted as meaning the property is no longer property of the estate.  Similarly §349(b)(3) uses the term 'revest' to put property in the estate back into the entity in which such property was vested immediately before commencement of the case when a case is dismissed. Finally, Judge Brown examined the trustee's argument that the modification was not in good faith.  The trustee asserted that the debtor's failure to commit the proceeds from the sale of his home to repay creditors was bad faith.   That a debtor refuses to modify a plan in accordance with his present ability to pay allegedly contravenes the purpose and intent of chapter 13.  §1325(a)(3) does require a plan to be proposed in good faith, and such requirement is to be applied to plan modifications per §1329(b).  One of the questions in the good faith analysis is whether the debtor has unfairly manipulated the Bankruptcy Code.3     In ruling in favor of the debtor, the court examined the case of In re Cranmer), 697 F.3d 1314, 1319 (10th Cir. 2012).  In this case an above-median income debtor did not include his $1,940/month social security income in his computation of projected disposable income, and did not commit such funds toward payment to unsecured creditors.  While the Code expressly omits social security income from the computation of disposable income, the trustee argued that given the virtual certainty of the receipt of these additional $87,000 funds during the plan such funds should be taken into account in determining the amount to be paid in the plan per Hamilton v. Lanning, 560 U.S. 505 (2010).  The 10th Circuit disagreed as the Code expressly authorized the exclusion of social security income, thus such income as note one of the unusual cases contemplated by Lanning.  When a debtor calculates the plan payments exactly as the Bankruptcy Coe and Social Security Act allow him to, the exclusion of social security income cannot constitute a lack of good faith.  Id. 697 F.3d at 1319.  Likewise the court in In re Boisjoli, 591 B.R. 468 (Bankr. D. Colo. 2018) rejected the trustee's argument that a 60 month 100% plan was in bad faith when the debtors had the ability to repay creditors much sooner.  If the plan met all the Code's requirements they had done everything the Code required of them.    Judge Brown concluded the same reasoning applied here, as the Code permits the debtors to retain the proceeds from the sale of the home. 1 Yoon v. Krick (In re Krick), 373 B.R. 593, 607 (Bankr. N.D. Ind. 2007). and see David Gray Carlson, Modified Plans of Reorganization and the Basic Chapter 13 Bargain 83 Am. Bankr. L.J. 585 (2009).↩2 2A Norman Singer & Shambie Singer, Sutherland Statutes and Statutory Construction § 48:1 (7th ed., October 2019 update) ("Sutherland") (citing Train v. Colo. Public Interest Research Group, Inc, 426 U.S. 1, 10 (1976)).↩3 Robinson v. Tenantry (In re Robinson), 987 F.2d 665, 668 n. 7 (10th Cir. 1993).↩Michael Barnett, Esq.Law Offices of Larry Heinkel, PA506 N Armenia Ave.Tampa, FL 33609-1703813 870-3100https://myfloridabankruptcylawyer.com

Debt collectors are trained to make your calls with them as stressful and as frustrating as possible. They’re trained to get you into a state of fear, to make you ashamed, and to hit every emotional button they can hit to make you pay up, even if you take actions that are highly detrimental to […] The post Philadelphia Residents: Know Your Rights When Debt Collectors Call appeared first on .

As many readers of our blog and emails know,  at Shenwick & Associates we are helping many commercial tenants vacate their leases prior to the  expiration of their lease, due to the virus and other economic factors. See https://shenwick.blogspot.com/2019/11/the-failed-or-closed-restaurant-and-its_6.html and "Commercial leases in New York City, COVID-19, Recent Protests and a Strategy to End or Terminate Commercial Leases", dated SUNDAY, JULY 12, 2020 can be found at https://shenwick.blogspot.com/2020/07/commercial-leases-in-new-york-city.html.A law was recently passed in NYC which limits the liability of individuals who have guaranteed leases with certain restrictions (that law Int. 1932-A, which is discussed below and which many people including attorneys and lawyers are not aware) can limit a guarantors exposure if a lease is terminated.The Wall Street Journal reports that only 10% of workers have returned to their office in NYC and with so many workers working remotely, many businesses would like to terminate or  exit their leases and or vacate their space prior to the expiration date of the lease to save on the cost of rent. In fact, office rent and the cost of commuting are significant business expenses that many businesses would like to reduce or eliminate.Additionally, many experts predict that many workers may never return to New York or other cities due to technological advances like Zoom, Google Meet, crime, the diminishing quality of life in New York, the cost, aggravation and time spent commuting and the other benefits of not having to commute, such as more family and leisure time.At Shenwick & Associates,  we have helped many tenants vacate their lease and space  using a multi pronged strategy consisting of:   1. review of the commercial lease to determine if the Landlord has breached any terms of the Lease, 2.   review of the guarantee or good guy guarantee signed by the   principle of the business, 3.  aggressive negotiations with the landlord and 4.  threatening or filing a bankruptcy petition, including new sub chapter 5 of chapter 11 of the bankruptcy code, to reject the lease in bankruptcy or to close the business.Many clients are interested in retaining our  services, but they are concerned about the impact of the  guarantee or the good guy guarantee, if the commercial tenant vacates the space early or terminates the lease prior to its expiration.Guarantees:There are two types of guarantees in leases: a regular guarantee and a good guy guarantee. Good guy guarantees are more common in leases  than regular guarantees in leases. Having reviewed many office guarantees, we note that many guarantees have a limited life, meaning that the guarantee expires on its own terms during the term of the lease or converts to a good guy guaranty, after a period of time.A good guy guarantee generally provides that the guarantors liability for rent or additional rent terminate when 1. the tenant gives proper notice (pursuant to the terms of the Lease or the good guy guaranty) that the tenant will vacate the space (generally 90 days), 2. The tenant does in fact vacate the space and is current on the payment of rent or additional rent when it vacates and 3. The premises are left “broome clean”. Provided that these and other conditions are met, the guarantors liability ceases, however the tenant remains liable for rent and additional rent until the lease expires. Oftentimes if we can show a landlord that the tenant is out of business, closing its business,  losing money or has few assets, the landlord may be amenable to allowing the tenant to vacate the space early, pursuant to a negotiated lease surrender agreement.If the landlord resists, we will draft a bankruptcy petition and send it to the landlord indicating that if the parties cannot reach an agreement then the tenant will file for bankruptcy and the landlord will lose rent, and incur significant legal fees for landlord tenant and bankruptcy attorneys.Additionally, there is a New York City law that can aid a tenant who wants to vacate a space with respect to money that may be owed by the guarantor., which law prohibits the enforcement of personal liability provisions in certain commercial leasesInt. 1932-A prohibits landlords under certain commercial leases from enforcing guarantees in their leases if the guarantors  are “natural persons,”  (it may not apply if the guarantor is an  LLC or corporations), provided that the default occurred between March 7, 2020 and September 30, 2020, and that the tenant was impacted by the stay at home orders implemented by the Governor’s office in one of the following ways: 1. the tenant was required to cease serving food or beverages for on-premises consumption or to cease operation under Executive Order 202.3 issued by the Governor on March 16, 2020; 2. the tenant was a non-essential retail establishment subject to in-person limitations under guidance issued by the New York State Department of Economic Development pursuant to Executive Order 202.6 issued by the Governor on March 18, 2020; or 3. the tenant was required to close to members of the public under Executive Order 202.7 issued by the Governor on March 19, 2020 (i.e. barbershops, hair salons, tattoo or piercing parlors, nail technicians, cosmetologists, estheticians and the provision of electrolysis, laser hair removal services and related personal care services).The law also provides that if a landlord  attempts to enforce a guaranty that the landlord knows or reasonably knows  is not enforceable, that would be  commercial tenant harassment that is prohibited under Subdivision a of section 22-902 of the Administrative Code of the City of New YorkThe facts of each case need to be reviewed to determine if Int. 1932-A applies, however at Shenwick & Associates we have found that many tenants meet the requirements of the law based on the fact that the tenant was a non-essential retail establishment and therefore their guarantor liability was voided.Clients that are interested in terminating their lease or existing their lease early should contact Jim Shenwick   jshenwick@gmail.com 212 541 6224.   

 https://www.bloomberg.com/news/features/2020-09-29/new-york-city-bankruptcies-2020-pivotal-point-for-business-as-covid-cases-rise Originally appeared on BloombergAlmost 6,000 city businesses have closed. Recovery hinges on office workers’ returnThe pandemic has battered New York City businesses, with almost 6,000 closures, a jump of about 40% in bankruptcy filings across the region and shuttered storefronts in the business districts of all five boroughs.It’s going to get worse.This fall, the nation’s largest city will see even more padlocked doors as companies burn through federal and private loans they tapped in March, landlords boot businesses that can’t make rent, and plummeting temperatures chill outdoor dining and shopping. “By late fall, there will be an avalanche of bankruptcies,” said Al Togut, a lawyer who has handled insolvencies for small businesses and huge corporations like Enron. “When the cold weather comes, that’s when we’ll start to see a surge in bankruptcies in New York City.”New York City and its businesses have reached a pivotal point. After over six months with the specter of Covid-19 hovering in every subway car and corner bodega, the virus is showing signs of resurgence.The state of New York on Saturday reported more than 1,000 new cases for the first time since early June. Spikes emerged in south Brooklyn and Queens neighborhoods with large Orthodox Jewish communities, just as they observed Yom Kippur. Meanwhile, principals called on the state to take over schools days before they restart in-person classes, saying Mayor Bill de Blasio failed to ensure enough staff to open safely.  Pedestrians pass by a closed storefront on Madison Avenue.The coming wave of business closings will touch every New Yorker as jobs get scarcer, neighborhoods lose beloved shops and families run out of cash.Already, dwindling tax revenue has led to cutbacks in municipal services. Trash on sidewalks, unkempt parks and an increase in shootings have made it more difficult to persuade workers to return to offices, more than 150 executives told the mayor in a letter this month. A dearth of office workers is a death knell for many merchants.“It’s a crisis, and we need to act—our economy can’t recover without saving small businesses,” said city Comptroller Scott Stringer, a candidate in next year’s mayoral election. “When they close, we don’t just lose our beloved Main Street businesses. We lose jobs, tax revenue and the economic backbone of our city.”The pandemic could permanently close as many as a third of New York’s 230,000 businesses, according to the Partnership for New York City, a business group.Bankruptcy filings in the region have skyrocketed since the middle of March, when the state of New York reported its first deaths from Covid-19 and Governor Andrew Cuomo closed all nonessential businesses. There were 610 filings in the Southern and Eastern Districts of New York from March 16 to Sept. 27, according to court records. That’s a 40 percent jump from the same period in 2019 and the most by far for any year since the financial crisis. The districts include some nearby counties.Almost 6,000 New York City businesses closed from March 1 to Sept. 11, according to Yelp, the website of user reviews. Over 4,000 of those closed permanently.The carnage has been demoralizing after decades in which the city fought back from the brink of bankruptcy, the scourges of crack cocaine and violent crime, terrorist attacks and recession. The pandemic hit as the city had achieved record high employment and low crime.  Diners eat outside a French restaurant in front of a storefront for lease.Prosperity expressed itself in bustling department stores from Bergdorf’s to Macy’s. Neighborhoods flourished with artisanal food and clothing boutiques, mom and pop stores, and coffee shops that gave New Yorkers a place to feel at home outside their tiny apartments.The nation’s business capital has always rebounded from past crises, but the advent of work-from-home in an economy increasingly dependent on white-collar jobs may be an insurmountable challenge.Distress is on display on Madison Avenue, once a global destination bustling with glamorous shoppers. From 60th Street to 70th Street today, about 60 of the 130 storefronts are closed and locked. Padlocked doors and windows covered with butcher paper or plywood line a quiet boulevard. Even inside the luxury retailers that remain open, like Dolce & Gabbana and Prada, a handful of well-coiffed sales people and broad-shouldered security guards stand expectantly on sales floors empty of customers.The owner of Jimmy’s Steak and Grill, a food cart on the corner of Madison and 60th, said that with nearby office buildings empty, sales of hot dogs and lamb-on-rice platters are down 60%.“Right now, I’m supposed to have a line,” Jimmy Gonzalez said through a black mask, motioning mournfully to the empty sidewalk. Over half the food-cart owners he knows gave up. “They sell the cart, they sell the permit, they sell everything.”Small businesses like Gonzalez’s show what’s at stake when big employers keep workers away from office towers. Manhattan businesses that use the digital payment system Square are earning only 62% of the revenue they earned pre-pandemic, according to the company.  A padlock on the door of Carroll Gardens Classic Diner, a neighborhood restaurant now permanently closed after struggling during the pandemic. “This is likely a result of a significant drop in the number of commuters coming into the borough,” according to Square economist Felipe Chacon.By late September, just 15% of the city’s 1.2 million office workers had returned, according to the Partnership for New York City.“Retail and real estate will continue to decline in New York until you can reignite the office traffic,” said Joseph Malfitano, who advised Brooks Brothers and the parent company of Ann Taylor in their bankruptcies this year.Many New York City business owners who give up don’t even bother filing for bankruptcy, which can cost as much as $25,000, according to Leslie Berkoff, a longtime bankruptcy attorney. Owners just lock the doors and walk away.“What’s the point of bankruptcy? Nobody’s going to chase you right now,” said Berkoff. “A lot of your vendors probably aren’t going to survive either.”That’s what cheesemonger Patrick Watson, the owner of Stinky Bklyn in the Cobble Hill neighborhood, did when his landlord refused to renegotiate his rent. Watson quickly sold off his inventory of imported Brie and Humboldt Fog and donated the remaining staples —cans of tuna, crackers and condiments—to a homeless shelter.“We tried. We really, really tried,” Watson wrote on Facebook in April. “For the safety of our crew and with no immediate end in sight, Sunday will be our last day.”About 10 neighboring businesses also closed, including a diner, a bar and a hair salon, said Randy Peers, president of the Brooklyn Chamber of Commerce.Sales remain brisk at Watson’s other business, a wineshop called Smith & Vine, possibly indicating heightened stress levels in the city.In an effort to help restaurants, the city closed dozens of streets on weekends so they can take that space, and it’s going to continue the program into the winter, allowing propane heat lamps and tent-like enclosures.“Once you hit below 60 degrees, it starts to get dicey,” said Vin McCann, a restaurant consultant. “I would bet you that between 25 and 50 percent of restaurants in New York City will not come back.”Rent relief could be possible if the state allowed localities to forgive landlords’ property-tax payments in return for discounting rent owed to them, said City Councilman Mark Gjonaj, who heads the council’s small-business committee.“This would help save struggling mom-and-pop shops while preventing landlords’ properties from going into distress,” he said.The city’s Department of Small Business Services received about 35,000 calls for help since June and gave out about 4,000 grants and loans from an $80 million program approved early in the pandemic.“A third of our small businesses could be closed if we don’t have a strong recovery,” said Jonnel Doris, the department’s commissioner. “The fate of small businesses will determine the fate of the city.”  A “For Lease” sign hangs in the window of Stinky Bklyn.  

https://nypost.com/2020/09/21/almost-90-percent-of-nyc-bars-and-restaurants-couldnt-pay-august-rent/ Originally appeared on New York Post Nearly 90 percent of New York City bar and restaurant owners couldn't pay their rent in August, heightening the continued crush the coronavirus shutdown has inflicted on Gotham’s economy. Eighty-seven percent of bars, restaurants, nightclubs and event spaces in the five boroughs could not pay their full August rent, according to data from 457 businesses surveyed between Aug. 25 and Sept. 11, in a new study released Monday by the nonprofit NYC Hospitality Alliance.It’s a 7 percentage-point increase from June and a four-point jump from July, darkening the dire picture for eateries desperately seeking relief following six months of partial — and in some cases total — closure due to COVID-19 shutdowns.Some 34 percent of this group said they could not pay rent at all last month, and only 12.9 percent were able to meet full payments.“Restaurants, bars and nightlife venues have been financially devastated by the COVID-19 pandemic,” said alliance executive director Andrew Rigie.“Even before the pandemic when operating at 100 percent occupancy, these small businesses were struggling to stay open. Now we’re seeing widespread closures, approximately 150,000 industry workers are still out of their jobs, and the overwhelming majority of these remaining small businesses cannot afford to pay rent.“The hospitality industry is essential to New York’s economic and social fabric, and to ensure the survival of these vital small businesses and jobs, we urgently need rent relief, an indefinite extension of outdoor dining, a roadmap for expanded indoor dining, covered business interruption insurance and immediate passage of the Restaurants Act by Congress,” he added.When asked if landlords were waiving rent in relation to COVID-19 hardships, just 40 percent of businesses responded in the affirmative — 28.5 percent said less than 50 percent of their rental obligations were waived in August, 43 percent said 50 percent and 28.5 percent said they were given a break on more than 50 percent of their rental fees.Meanwhile, 90 percent reported they have been trying to negotiate their leases, but their landlords wouldn’t budge.The study also comes ahead of the long-awaited partial reopening of New York City’s indoor dining slated for Sept. 30 at 25 percent capacity.New York City will be the last region in the state — and also a month behind neighboring New Jersey — to get the green light for the practice, despite a majority of the Empire State’s 57 counties outside the five boroughs being approved for the practice since June.“I’m not really surprised because the industry is devastated by this pandemic,” said David Rosen, owner of several eateries including Williamsburg’s the Breakers. He is also co-founder of the Brooklyn Allied Bars and Restaurants and a member of the New York City Nightlife Advisory Board.“The analysis around why folks are not able to get firm relief from their landlord, or renegotiate around long-term lease agreements or changes, is interesting because the narrative for the past few months has generally trended in a positive direction,” said Rosen.“I can understand why landlords have been reticent to renegotiate because people have been under the impression that we would reopen or get back to normal,” he added, saying he, too, is in different stages of ongoing discussions with his landlords and doesn’t expect to fully reopen his venues until at least next spring.“What’s concerning about this report is I would assume given the past two months and with outdoor dining unfortunately will be peak revenue season during this pandemic for restaurants. As we head into the winter, even with indoor dining on the horizon, I don’t think that 25 percent indoor will exceed what exists already outside. This ‘inability to pay rent’ trend will continue, if not worsen,” he said.“We understand the difficulties facing restaurants, which is why we’re protecting commercial establishments from eviction, allowing bars to sell cocktails via take-out and delivery, and cutting red tape so restaurants can easily expand outdoor dining,” said Jack Sterne, a spokesman for Gov. Cuomo. Guidelines will be reassessed by Nov. 1 and restaurants may be allowed to increase to 50 percent capacity depending on positive compliance and infection data, according to state officials.–– ADVERTISEMENT ––

 https://nypost.com/2020/09/17/majority-of-covid-19-business-closures-are-permanent-report/Originally appeared on New York Post Nearly 60 percent of businesses that closed nationwide during the COVID-19 pandemic are never reopening again, according to a report.  The vast majority of those businesses are restaurants and gift stores, according to Yelp’s Local Economic Impact Report, a monthly survey of business listings.As of Aug. 31, 163,735 businesses were listed as closed, with 97,966 of them permanent closures — a 23 percent increase from July 10, the report said.Within the retail sector, permanent closures of bars and nightclubs grew by 10 percent since July, while closures of beauty related shops grew by 23 percent over the same period. Fitness club closures grew by an alarming 23 percent.On Monday, the owner of New York Sports Clubs filed for bankruptcy protection, following on the heels of the May bankruptcy filing of Gold’s Gym.Meanwhile, some businesses have actually thrived during the pandemic, according to the report.Home improvement businesses, including contractors and plumbers as well as auto-related businesses like towing companies have been spared the brunt of the pandemic.“Even in the wake of increased closures we’re seeing businesses effectively transition to new operating models while keeping their employees and consumers safe,” the report stated.The five top cities for permanent closures were New York, Los Angeles, San Francisco, Chicago and Dallas. Pittsburgh, Philadelphia and Baltimore had among the fewest closures, according to the report.