A bill to amend title 11, United States Code, to change the treatment of certain rental obligations during bankruptcy.

II 116TH CONGRESS 2D SESSION S. 4479 To amend title 11, United States Code, to change the treatment of certain rental obligations during bankruptcy. IN THE SENATE OF THE UNITED STATES AUGUST 6, 2020 Mr. TILLIS introduced the following bill; which was read twice and referred to the Committee on the Judiciary A BILL To amend title 11, United States Code, to change the treatment of certain rental obligations during bankruptcy. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. BANKRUPTCY AMENDMENTS. 3 (a) EXECUTORY CONTRACTS AND UNEXPIRED 4 LEASES.— 5 (1) IN GENERAL.—Section 365(d) of title 11, 6 United States Code, is amended— 7 (A) in paragraph (3)— 8 (i) by inserting ‘‘(A)’’ after ‘‘(3)’’; 9 VerDate Sep 11 2014 17:35 Aug 29, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S4479.IS S4479 pamtmann on DSKBC07HB2PROD with BILLS 2 •S 4479 IS (ii) by inserting ‘‘, except as provided 1 in subparagraph (B)’’ after ‘‘such 60-day 2 period’’; and 3 (iii) by adding at the end the fol- 4 lowing: 5 ‘‘(B) In a case under subchapter V of chapter 11, 6 the time for performance of an obligation described in sub- 7 paragraph (A) arising under any unexpired lease of non- 8 residential real property may be extended by the court if 9 the debtor is experiencing or has experienced a material 10 financial hardship due, directly or indirectly, to the 11 coronavirus disease 2019 (COVID–19) pandemic until the 12 earlier of— 13 ‘‘(i) the date that is 60 days after the date of 14 the order for relief, which may be extended by the 15 court for an additional period of 60 days if the court 16 determines that the debtor is continuing to experi- 17 ence a material financial hardship due, directly or 18 indirectly, to the coronavirus disease 2019 (COVID– 19 19) pandemic; or 20 ‘‘(ii) the date on which the lease is assumed or 21 rejected under this section. 22 ‘‘(C) An obligation described in subparagraph (A) for 23 which an extension is granted under subparagraph (B) 24 shall be treated as an administrative expense described in 25 VerDate Sep 11 2014 17:35 Aug 29, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S4479.IS S4479 pamtmann on DSKBC07HB2PROD with BILLS 3 •S 4479 IS section 507(a)(2) in accordance with section 1191(e).’’; 1 and 2 (B) in paragraph (4), by striking ‘‘120’’ 3 each place it appears and inserting ‘‘210’’. 4 (2) SUNSET.— 5 (A) IN GENERAL.—Effective on the date 6 that is 2 years after the date of enactment of 7 this Act, section 365(d) of title 11, United 8 States Code, is amended— 9 (i) in paragraph (3)— 10 (I) by striking ‘‘(A)’’ after ‘‘(3)’’; 11 (II) by striking ‘‘, except as pro- 12 vided in subparagraph (B)’’ after 13 ‘‘such 60-day period’’; and 14 (III) by striking subparagraphs 15 (B) and (C); and 16 (ii) in paragraph (4), by striking 17 ‘‘210’’ each place it appears and inserting 18 ‘‘120’’. 19 (B) SUBCHAPTER V CASES FILED BEFORE 20 SUNSET.—Notwithstanding the amendments 21 made by subparagraph (A), the amendments 22 made by paragraph (1) shall apply in any case 23 commenced under subchapter V of chapter 11 24 of title 11, United States Code, before the date 25 VerDate Sep 11 2014 17:35 Aug 29, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S4479.IS S4479 pamtmann on DSKBC07HB2PROD with BILLS 4 •S 4479 IS that is 2 years after the date of enactment of 1 this Act. 2 (b) PREFERENCES.— 3 (1) IN GENERAL.—Section 547 of title 11, 4 United States Code, is amended— 5 (A) in subsection (b), in the matter pre- 6 ceding paragraph (1), by striking ‘‘and (i)’’ and 7 inserting ‘‘, (i), and (j)’’; and 8 (B) by adding at the end the following: 9 ‘‘(j)(1) In this subsection: 10 ‘‘(A) The term ‘covered payment of rental ar- 11 rearages’ means a payment of arrearages that— 12 ‘‘(i) is made in connection with an agree- 13 ment or arrangement— 14 ‘‘(I) between the debtor and a lessor 15 to defer or postpone the payment of rent 16 and other periodic charges under a lease of 17 nonresidential real property; and 18 ‘‘(II) made or entered into on or after 19 March 13, 2020; 20 ‘‘(ii) does not exceed the amount of rental 21 and other periodic charges agreed to under the 22 lease of nonresidential real property described 23 in clause (i)(I) before March 13, 2020; and 24 VerDate Sep 11 2014 17:35 Aug 29, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S4479.IS S4479 pamtmann on DSKBC07HB2PROD with BILLS 5 •S 4479 IS ‘‘(iii) does not include fees, penalties, or in- 1 terest in an amount greater than the amount of 2 fees, penalties, or interest— 3 ‘‘(I) scheduled to be paid under the 4 lease of nonresidential real property de- 5 scribed in clause (i)(I); or 6 ‘‘(II) that the debtor would owe if the 7 debtor had made every payment due under 8 the lease of nonresidential real property 9 described in clause (i)(I) on time and in 10 full before March 13, 2020. 11 ‘‘(B) The term ‘covered payment of supplier ar- 12 rearages’ means a payment of arrearages that— 13 ‘‘(i) is made in connection with an agree- 14 ment or arrangement— 15 ‘‘(I) between the debtor and a supplier 16 of goods or services to defer or postpone 17 the payment of amounts due under an ex- 18 ecutory contract for goods or services; and 19 ‘‘(II) made or entered into on or after 20 March 13, 2020; 21 ‘‘(ii) does not exceed the amount due 22 under the executory contract described in clause 23 (i)(I) before March 13, 2020; and 24 VerDate Sep 11 2014 17:35 Aug 29, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S4479.IS S4479 pamtmann on DSKBC07HB2PROD with BILLS 6 •S 4479 IS ‘‘(iii) does not include fees, penalties, or in- 1 terest in an amount greater than the amount of 2 fees, penalties, or interest— 3 ‘‘(I) scheduled to be paid under the 4 executory contract described in clause 5 (i)(I); or 6 ‘‘(II) that the debtor would owe if the 7 debtor had made every payment due under 8 the executory contract described in clause 9 (i)(I) on time and in full before March 13, 10 2020. 11 ‘‘(2) The trustee may not avoid a transfer under this 12 section for— 13 ‘‘(A) a covered payment of rental arrearages; or 14 ‘‘(B) a covered payment of supplier arrear- 15 ages.’’. 16 (2) SUNSET.— 17 (A) IN GENERAL.—Effective on the date 18 that is 2 years after the date of enactment of 19 this Act, section 547 of title 11, United States 20 Code, is amended— 21 (i) in subsection (b), in the matter 22 preceding paragraph (1), by striking ‘‘, (i), 23 and (j)’’ and inserting ‘‘and (i)’’; and 24 (ii) by striking subsection (j). 25 VerDate Sep 11 2014 17:35 Aug 29, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S4479.IS S4479 pamtmann on DSKBC07HB2PROD with BILLS 7 •S 4479 IS (B) CASES FILED BEFORE SUNSET.—Not- 1 withstanding the amendments made by sub- 2 paragraph (A), the amendments made by para- 3 graph (1) shall apply in any case commenced 4 under title 11, United States Code, before the 5 date that is 2 years after the date of enactment 6 of this Act. 7 Æ VerDate Sep 11 2014 17:35 Aug 29, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6301 E:\BILLS\S4479.IS S4479 pamtmann on DSKBC07HB2PROD with BILLS