Bankruptcy and the Coronavirus: Part II   [open pdf - 0B]

From the Introduction: "As the pace of extraordinary intervention by regulators and lawmakers to help consumers and businesses stave off economic collapse slows, and the economy begins to open up, the initial fallout of the crisis will become clearer. Many businesses that do not survive may simply stay closed, paying their creditors (either in full, or under renegotiated terms) and shutting down. [...] Bankruptcy filings also are likely to increase dramatically, as consumers and businesses seek either to restructure their debt or to turn over their assets to the court and leave their current obligations behind. [...] This report begins with an update on the question of whether a bankruptcy wave is in fact materializing. The report then takes a closer look at two key features of the bankruptcy process: the standstill that goes into effect when a debtor files for bankruptcy and the debtor's access to financing for the bankruptcy process. In each context, scholars and other commentators have advocated Covid-19 [coronavirus disease 2019] specific adjustments to the ordinary bankruptcy rules. The report will briefly assess the current proposals, concluding that an expanded standstill is not necessary but enhanced access to financing is."

Brookings Institution
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