BILL NUMBER: S6447
SPONSOR: CLEARE
 
TITLE OF BILL:
An act to amend the executive law, in relation to establishing a tempo-
rary state assistance fund to provide legal counsel in certain bankrupt-
cy proceedings and providing for the administration thereof
 
PURPOSE OF BILL:
To provide free legal counsel for small businesses adversely affected by
the COVID-19 so that they may take advantage of recently expanded feder-
al bankruptcy protections. Such fund is necessary to ensure that small
businesses reorganize debt and get a fresh start before the timeline
closes on a greater debt threshold permitted under the federal CARES
Act.
 
SUMMARY OF SPECIFIC PROVISIONS:
Section (1) provides this act shall be known as may be cited as the
SMART ("Save Merchants and Retail Tenants") Act.
§ 2 amends the Executive law by adding new section 94-d; Subdivision
(1) provides relevant definitions Subdivision (2) provides that all
eligible businesses shall have access to legal services in certain small
business bankruptcy cases.
The subsection further provides for the creation of a legal services
fund and details program limitations.
-Subdivision (3) provides guidelines for administration and oversight of
the legal fund including competent representation, targeting of grants,
and general administration over the program.
-Subdivision (4) provides the requirements for the legal fund to fully
comply with the intent of the legislation.
Section (3) sets the effective date.
 
JUSTIFICATION:
Small businesses are essential to maintaining a vibrant and diverse
community. COVID-19 has brought great strain upon small business, forc-
ing many to either temporarily shut down or scale back their operations.
The federal CARES Act gave struggling small business an opportunity to
take advantage of the more efficient and cost-effective Subchapter 5 of
Chapter 11 of the Bankruptcy Code by increasing the debt limit for
eligible debtors from about $2.7 million to $7.5 million. This provision
also permits a debt cramdown in cases where a Chapter 11 plan does not
discriminate unfairly and is "fair and equitable" to each impaired non-
accepting class.
Unfortunately, the debt limit reverts to the $2.7 million threshold on
March 28, 2021, and many small businesses are not aware of this limited
opportunity. We are faced with a limited budget to assist with the
financial recovery of small businesses in response to COVID-19 and
government forced shutdowns, this temporary fund to provide legal
assistance will provide the best possible return on investment to
protect our Main Street businesses. It's a SMART investment for New York
to rebuild small businesses, protect the character of our communities,
and prevent the spread of vacant neighborhood storefronts.
 
PRIOR LEGISLATIVE HISTORY:
2019-20: 89022/A11084
 
FISCAL IMPLICATIONS:
To be determined.
 
EFFECTIVE DATE:
This act shall take effect immediately