NY State Senate Bill 2021-S1142

Senate Bill S1142

2021-2022 Legislative Session

Establishes a temporary state assistance fund to provide legal counsel in certain bankruptcy proceedings and providing for the administration thereof

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Archive: Last Bill Status - In Senate Committee Finance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 07, 2021	referred to finance

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2021-S1142 (ACTIVE) - Details

See Assembly Version of this Bill:: A5922
Current Committee:: Senate Finance
Law Section:: Executive Law
Laws Affected:: Add §94-d, Exec L
Versions Introduced in Other Legislative Sessions:: 2019-2020: S9022, A11084
2023-2024: S3033, A368

2021-S1142 (ACTIVE) - Summary

Establishes a temporary state assistance fund to provide legal counsel for bankruptcy proceedings under chapter eleven of the federal bankruptcy code and provides for the administration thereof.

2021-S1142 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S1142

SPONSOR: BENJAMIN
 
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: S9022/A11084

 
FISCAL IMPLICATIONS:

To be determined.

 
EFFECTIVE DATE:
This act shall take effect immediately.

2021-S1142 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   1142
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                              January 7, 2021
                                ___________
 
 Introduced by Sens. BENJAMIN, JACKSON -- read twice and ordered printed,
   and when printed to be committed to the Committee on Finance
 
 AN  ACT to amend the executive law, in relation to establishing a tempo-
   rary state assistance fund to provide legal counsel in  certain  bank-
   ruptcy proceedings and providing for the administration thereof

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Short title. This act shall be known and may  be  cited  as
 the "save merchants and retail tenants (SMART) act".
   § 2. The executive law is amended by adding a new section 94-d to read
 as follows:
   §  94-D.  TEMPORARY STATE ASSISTANCE TO FUND LEGAL SERVICES IN CERTAIN
 BANKRUPTCY PROCEEDINGS. 1. DEFINITIONS. AS USED IN THIS SECTION:
   (A) "ADMINISTRATOR" MEANS THE NEW YORK OFFICE OF COURT ADMINISTRATION.
   (B) "COVERED BUSINESS" MEANS ANY SMALL BUSINESS, NOT-FOR-PROFIT CORPO-
 RATION, LIMITED PARTNERSHIP, LIMITED LIABILITY COMPANY, LIMITED  LIABIL-
 ITY  PARTNERSHIP,  AS  WELL  AS  OTHER  MISCELLANEOUS  BUSINESSES, WHICH
 CONDUCTS A MAJORITY OF ITS BUSINESS  IN  THE  STATE  AND  WAS  ADVERSELY
 AFFECTED BY COVID-19 OR PUBLIC HEALTH RESTRICTIONS ENFORCED BY THE STATE
 DURING  THE  COVID-19  PANDEMIC, WHICH ARE ELIGIBLE FOR RELIEF UNDER THE
 FEDERAL SMALL BUSINESS REORGANIZATION ACT, AS AMENDED BY THE CORONAVIRUS
 AID, RELIEF, AND ECONOMIC SECURITY (CARES) ACT OF 2020,  AND  FILES  FOR
 BANKRUPTCY  PROTECTION UNDER SUCH ACT PRIOR TO MARCH TWENTY-SEVENTH, TWO
 THOUSAND TWENTY-TWO.
   (C) "BANKRUPTCY COURT" MEANS THE UNITED STATES  BANKRUPTCY  COURT  FOR
 THE NORTHERN, SOUTHERN, EASTERN OR WESTERN DISTRICT OF THE STATE.
   (D) "LEGAL SERVICES" MEANS INDIVIDUALIZED LEGAL ASSISTANCE IN A SINGLE
 CONSULTATION  AND/OR  ONGOING  LEGAL REPRESENTATION, PROVIDED BY A LEGAL
 SERVICES PROVIDER TO A COVERED BUSINESS, AND ALL LEGAL ADVICE, ADVOCACY,
 AND ASSISTANCE ASSOCIATED WITH SUCH SERVICE.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD05098-01-1

 S. 1142                             2
 
   (E) "LEGAL SERVICES PROVIDER" MEANS AN  INDIVIDUAL,  ORGANIZATION,  OR
 ASSOCIATION  THAT  HAS  THE  AUTHORITY  TO PROVIDE LEGAL SERVICES AND IS
 DESIGNATED BY THE ADMINISTRATOR TO PROVIDE SUCH SERVICES.
   2.  TEMPORARY ACCESS TO LEGAL SERVICES FOR SMALL BUSINESSES IN CERTAIN
 BANKRUPTCY PROCEEDINGS. ALL COVERED  BUSINESSES  SHALL  HAVE  ACCESS  TO
 LEGAL  SERVICES  AS PROVIDED IN THIS SUBDIVISION AND MADE AVAILABLE IN A
 FUND MAINTAINED BY THE ADMINISTRATOR PURSUANT  TO  SUBDIVISION  FOUR  OF
 THIS SECTION.
   (A)   COVERED   BUSINESSES  AFFECTED  BY  COVID-19  OR  PUBLIC  HEALTH
 RESTRICTIONS ENFORCED BY THE STATE DURING THE COVID-19  PANDEMIC,  WHICH
 FILE  FOR RELIEF UNDER THE FEDERAL SMALL BUSINESS REORGANIZATION ACT, AS
 AMENDED BY THE CORONAVIRUS AID, RELIEF, AND  ECONOMIC  SECURITY  (CARES)
 ACT,  PRIOR TO MARCH TWENTY-SEVENTH, TWO THOUSAND TWENTY-TWO, SHALL HAVE
 ACCESS TO LEGAL SERVICES IN CONNECTION WITH THE FILING  AND  PROSECUTION
 UNDER CHAPTER ELEVEN OF THE FEDERAL BANKRUPTCY CODE.
   (B)  IN  ALL  CASES, ACCESS TO LEGAL SERVICES ESTABLISHED IN PARAGRAPH
 (A) OF THIS SUBDIVISION SHALL TERMINATE:
   (I) UPON THE TERMINATION OR DISMISSAL OF THE BANKRUPTCY PROCEEDING;
   (II) AT THE RECOMMENDATION OF THE UNITED STATES TRUSTEE; OR
   (III) AT THE RECOMMENDATION OF THE ASSIGNED UNITED  STATES  BANKRUPTCY
 JUDGE.
   (C) IN ALL CASES, THE RIGHT TO COUNSEL ESTABLISHED IN PARAGRAPH (A) OF
 THIS SUBDIVISION SHALL NOT EXTEND TO APPEALS.
   3.  POWERS  AND  DUTIES  OF  THE  ADMINISTRATOR.  THE ADMINISTRATOR IS
 CHARGED WITH IMPLEMENTING THE REQUIREMENTS OF THIS SECTION NO LATER THAN
 OCTOBER FIRST, TWO THOUSAND TWENTY-ONE, AND MAY PROMULGATE  SUCH  RULES,
 POLICIES,  AND  PROCEDURES AS MAY BE NECESSARY AND APPROPRIATE TO ACCOM-
 PLISH SUCH IMPLEMENTATION. THE ADMINISTRATOR SHALL HAVE  THE  POWER  AND
 RESPONSIBILITY TO:
   (A)  ENSURE  INDEPENDENT,  COMPETENT,  AND  ZEALOUS  REPRESENTATION OF
 COVERED BUSINESSES RECEIVING LEGAL SERVICES PROVIDED  PURSUANT  TO  THIS
 SECTION;
   (B) EXAMINE, EVALUATE, AND MONITOR LEGAL SERVICES PROVIDED PURSUANT TO
 THIS SECTION;
   (C)  ESTABLISH MEASURES OF PERFORMANCE TO MONITOR THE QUALITY OF LEGAL
 SERVICES AND THE OVERALL EFFECTIVENESS OF SUCH LEGAL SERVICES;
   (D)  TARGET  GRANTS  IN  SUPPORT  OF  INNOVATIVE  AND   COST-EFFECTIVE
 SOLUTIONS THAT ENHANCE THE PROVISION OF LEGAL SERVICES; AND
   (E)  INVESTIGATE  AND  MONITOR  ANY  OTHER  MATTERS  RELEVANT  TO  THE
 PROVISION OF LEGAL SERVICES WHICH THE ADMINISTRATOR DEEMS IMPORTANT.
   4. FUNDING. (A) THE STATE SHALL ESTABLISH A DEDICATED FUND  AND  SHALL
 APPROPRIATE  SUFFICIENT  SUMS  INTO  SUCH  FUND  TO  FULLY CARRY OUT THE
 REQUIREMENTS OF THIS SECTION. FUNDS NECESSARY TO  FULLY  CARRY  OUT  THE
 REQUIREMENTS  OF  THIS SECTION SHALL BE DETERMINED BY THE ADMINISTRATOR,
 IN CONSULTATION WITH THE DIRECTOR OF THE DIVISION OF THE BUDGET.
   (B) THE ADMINISTRATOR SHALL BE CHARGED WITH ENSURING THAT APPROPRIATED
 FUNDS ARE  TIMELY  DISTRIBUTED  TO  LEGAL  SERVICES  PROVIDERS  FOR  THE
 PROVISION OF LEGAL SERVICES.
   § 3. This act shall take effect immediately.

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Senate Bill S1142

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Sponsored By

Brian Benjamin