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From: Time By: Melissa ChanMay 15, 2020

Every cent matters to Kim Jaemin, a cab driver in virus-ravaged New York City, whose diet has been reduced to instant noodles despite working 14-hour shifts, seven days a week.

Since the coronavirus pandemic emptied the streets of passengers, the 58-year-old from South Korea has been living on about $65 a day. He buys near-expired, discounted food that he rations to last the week. Two meals of the day consist of the cheapest brand of ramen noodles he can find. “Forget about nutrition,” he says.

On May 2, of the seven total passengers he picked up, five did not tip. The other two tipped him less than $3 each. While most of his fellow cab drivers have quit—either because they fear getting sick with COVID-19, which has killed dozens of their colleagues, or because they feel it’s useless to scour a deserted city for riders—Kim says he has no choice but to work more. “I have to make every possible penny, nickel and dime,” says Kim, who lives alone in Queens and scribbles every fare and tip he gets into a notepad.

“The only way I could survive,” he adds, “I have to work every day.”

That’s the reality for hundreds of New York City’s taxicab drivers who remain on the road, searching for scarce fares as ridership hits record lows. The number of cab rides in the city fell from about 506,000 during the first week of March to roughly 28,500 during the week of May 4, according to the Metropolitan Taxicab Board of Trade (MTBOT), the city’s largest taxi group, which represents more than 5,500 yellow cab owners. The city’s Taxi & Limousine Commission (TLC) did not disclose its data, but the MTBOT, which represents about half of the entire taxi industry, says fares across its fleets have dropped about 94%.

“It’s a staggering number that we’ve never experienced before,” MTBOT spokesman Michael Woloz says. “Theaters are dark. Restaurants are closed. All of the traditional fares have disappeared.”

Outside of Grand Central Terminal at 9 a.m. on a recent Monday, cabs are lined up, but most are waiting in vain. The world-famous transportation hub is near-vacant, and silence has replaced the usual clamor of rush-hour traffic. “It’s like a movie right now,” Mohamed Eleissawy, a 63-year-old taxi driver, says of the abandoned metropolis.

Amid a drop in fares, thousands of drivers have stopped working. In the first week of March, about 3,660 taxi drivers were still on the road, according to the MTBOT’s tally. Now, the group has counted fewer than 600. Thousands have signed up to deliver meals to sick or elderly residents for $53 per route as part of a new citywide program meant to help vulnerable populations and earn drivers more cash. By repurposing their jobs, the TLC said these drivers are “helping us to ensure that no one goes hungry.” But like Jaemin, many of the city’s cab drivers are inching closer to severe hunger themselves.

A new survey by the New York Taxi Workers Alliance (NYTWA), which represents about 23,000 taxi and rideshare-app drivers, found more than 82% of drivers have run out of money to buy food or say they will soon reach that point. Out of 919 drivers surveyed, more than 700 said they were unable to pay their rent or mortgage in March and April. The Independent Drivers Guild, which represents more than 80,000 for-hire drivers in the city, said 45% of its members in late April had asked for help securing food. Nearly 70% of the guild’s drivers said they were unable to make rent or mortgage in April, with more saying they won’t be able to pay in May.

The TLC said it’s still tracking fatality figures, but Bhairavi Desai, NYTWA’s executive director, says at least 50 drivers have died from COVID-19 so far. “It’s heartbreaking,” Desai says.

Desai fears the pandemic will be a “breaking point” for many drivers already suffering financial hardships due to competition with ride-sharing apps and crushing loans they took out to buy medallions, which are permits the city requires to own a yellow cab. In 2018, at least eight professional drivers in the city died by suicide, which advocates blamed on crippling debt. The industry had been showing signs of improvement, especially after the spate of suicides grabbed the attention of local lawmakers, according to Desai and Woloz. Then the pandemic hit.

“The yellow cab is the quintessential symbol of New York City,” Desai says. “But these are men and women, who for every time we think the bottom has finally settled in, it falls out all over again.”

Now, the futures of cab drivers are more uncertain than ever. As new COVID-19 cases slowly drop in New York City, advocates are hopeful the century-old taxi industry will rebound as it did after the Sept. 11 terrorist attacks and after Superstorm Sandy in 2015. “New York City is the biggest and best,” TLC spokesman Allan Fromberg says, “and we expect the future to be bright again in time.”

Desai and Woloz say yellow cabs could even become a vital part of the city’s recovery, transporting both people and goods as some commuters avoid crowded subways. “They know how to navigate through a crisis,” Desai says. “Through every city disaster, drivers have kept working.”

But predictions among some in the workforce are grim. “The coronavirus is the last nail in the yellow cab coffin,” says 36-year-old driver Khurshid Ahmed, who owes $370,000 on his medallion loan. “I am tied to this job until my last breath,” he adds. “I am not seeing any future.”

Jacob Smith, 49, from Ghana, agrees. Standing on 5th Ave., which was devoid of pedestrians at what used to be rush hour, the yellow cab driver and father of two has little hope. “When the doors open, I’m not sure people will come back,” he says. Smith is set on changing careers as soon as someone, anywhere, will hire him. “New York is famous for the cab,” he says, “but corona will be the end.”

Almontasir Ahmed Mohamed, 33, is also weighing a career switch after driving a green cab for six years. He’s studying engineering science at a Kingsborough community college part-time and wonders when he will see his family again in his home country of Sudan. “I stopped thinking about my future,” he says. “The virus has made me confused about my plans.”

For Kim, though, the U.S. has been his home for almost 40 years, so going back to South Korea is not an option. Neither is giving up his cab, because driving is all he has known. “This is my job until I die,” he says. “There is no other job I could do.”

But as he jeopardizes his own health by getting behind the wheel, Kim says at least one passenger a day will make a racist remark, telling him to go back to his country or speak better English. “I don’t think the city respects us like doctors and nurses, the police, the subway workers,” he says. “We are essential workers, too.”

“Without the yellow cabs,” he adds, “the city cannot move.”

One of the objectives of the Bankruptcy Code is to ensure that each class of creditors is treated equally. And one of the ways that is accomplished is to allow the debtor’s estate to claw back certain pre-petition payments made to creditors. Accordingly, creditors of a debtor who files for bankruptcy are often unpleasantly surprised to learn that they may be forced to relinquish “preferential” payments they received before the bankruptcy filing. Read More ›
Tags: Chapter 7, Eastern District of Michigan

From: NY PostBy: Thornton McEnery May 11, 2020
https://nypost.com/2020/05/11/nyc-taxi-rescue-plan-calls-for-medallions-to-be-250000/

Small Business Reorganizations under New Subchapter V of Chapter 11 of the Bankruptcy Code The purpose of this class will be  to discuss  the changes to the new Subchapter V of the bankruptcy code and its impact on small business reorganizations.On August 23, 2019, President Trump signed into law the Small Business Reorganization Act of 2019 (“SBRA”), Pub. L. No. 116-54 (2019). Congress increased the cap to $7,500,000 for the next year as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act from $2,725,625.00.SBRA became effective on February 19, 2020These provisions are not a new chapter of the bankruptcy code, but a subchapter of chapter 11 of the bankruptcy code and the existing chapter 11 sections will apply unless otherwise modified by Subchapter V. There are 3 chapters of the bankruptcy code that are used in this district and they are chapter 7, chapter 13 and chapter 11. Subchapter V is a subchapter of chapter 11 and not a new chapter of the Bankruptcy Code In the way of background, chapter 7 cases are liquidations for individuals or businesses, chapter 13 are organizations for individuals (not businesses) where the individual uses 3 to 5 years of future earnings (disposable income) to pay creditors and chapter 11  are reorganizations or liquidations for individuals or businesses.As will be discussed below Subchapter V is a blend of chapter 11 and chapter 13 and the goal of the law is to make it easier and cheaper for small businesses to reorganize!In this district, 90% of chapter 11 filings are unable to reorganize and those cases are converted to chapter 7 (closed by the Bankruptcy Trustee) or dismissed as “no asset” cases. This change in the law is an attempt by Congress to simplify the reorganization process and reduce the cost of small business chapter 11 filings. Subchapter V can be found at 11 U.S. Code sections 1182 through 1195. 

1. Debtor. Section 1182(1) defines a Debtor (individual or business) as a person engaged in commercial or business activities that has aggregate noncontingent liquidated secured and unsecured debts as of the date of the filing of the bankruptcy petition of not more than $7,500,000 not less than 50 percent of which arose from the commercial or business activities of the Debtor.
1. Noncontingent liquidated debt, both secured and unsecured debt must not exceed $7,500,000.
2. 50% or more of the debt must have arisen from commercial or business activities of the Debtor. 1182(1)(A) 
3. Non-contingent debt refers to a debt that is owed at present without any acts needing to occur first.
4. Contingent debt is one in which there is a 'triggering event' or some condition precedent for the debt to exist.
5. Subchapter V does not apply to publicly traded companies 1182(B)(ii) 

II. Trustee. The United States Trustee (a government agency which is a component of the Department of Justice)  shall appoint a standing trustee as a Trustee in a case filed under this chapter 1183(a)

1. What are the roles of a Trustee in Subchapter V?

1. Appear and be heard at the status conference before the Bankruptcy Judge assigned to the case2. Attend plan confirmation hearing; 3. Ensure that the Debtor commences making timely payments required by a plan confirmed under this subchapter; 4. If the Debtor ceases to be a Debtor in possession, perform the duties specified in section 704(a)(8) and paragraphs (1), (2), and (6) of section 1106(a) of this title, including operating the business of the Debtor  and 

2. Facilitate the development of a consensual plan of reorganization-this is a new role for a Trustee. Developing a consensual plan is primarily the role of Debtor’s counsel. 

3. If the plan is confirmed under the service of the trustee in the case shall terminate when the plan has been substantially consummated  ⸹1183(c)(1)

III. Operation of the Business. The Debtor shall have the right to run its business  ⸹1184.IV. Removal of the Debtor ⸹1185. On request of a party in interest, and after notice and a hearing, the court shall order that the Debtor  not be a Debtor in possession for cause, including fraud, dishonesty, incompetence, or gross mismanagement of the affairs of the Debtor.V. Property of the Estate.  If a plan is confirmed, property of the estate includes, includes  property pursuant to section 541 of the Bankruptcy Code and (1) property that  the Debtor acquires after the commencement of the case,  (2) earnings from services performed by the Debtor after the date of commencement of the case but before the case is closed, dismissed, or converted to a case under chapter 7, 12, or 13 ⸹1186.

1. The Debtor shall remain in possession of all property of the estate ⸹1186(b).

VI. Status Conference ⸹1188

1. Not later than 60 days after the entry of the order for relief under this chapter, the court shall hold a status conference to further the expeditious and economical resolution of a case under this subchapter ⸹1188(a).
2. Not later than 14 days before the date of the status conference under subsection (a), the Debtor shall file with the court and serve on the trustee and all parties in interest a report that details the efforts the Debtor has undertaken and will undertake to attain a consensual plan of reorganization. ⸹1188(c)

VII. Filing of the Plan § 1189

1. Only the Debtor may file a plan under this subchapter. 1189(a) 
2. The Debtor shall file a plan not later than 90 days after the order for relief under this chapter, except that the court may extend the period if the need for the extension is attributable to circumstances for which the Debtor should not justly be held accountable 1189(b).

VIII. Contents of Plan  § 1190(1)  A plan filed under this subchapter shall include— (A) a brief history of the business operations of the Debtor; (B) a liquidation analysis; and (C) projections with respect to the ability of the Debtor to make payments under the proposed plan of reorganization; (2) Shall provide for the submission of all or such portion of the future earnings or other future income of the Debtor to the supervision and control of the Trustee as is necessary for the execution of the plan; and (3) Notwithstanding section 1123(b)(5) of this title, may modify the rights of the holder of a claim secured only by a security interest in real property that is the principal residence of the Debtor if the new value received in connection with the granting of the security interest was— (A) not used primarily to acquire the real property; and (B) used primarily in connection with the small business of the Debtor ⸹1190(3) allows a Debtor, pursuant to a confirmed chapter 11 plan, to modify a mortgage on the Debtor’s principal residence if the debt was not used to acquire the residence and used primarily with the operation of the Debtors small business-this is a major change in bankruptcy law since first mortgages on a Debtor’s principal residence cannot be modified.IX. Confirmation of Plan § 1191

1. The Court on request of a Debtor shall confirm the plan  if the plan does not discriminate unfairly, and is fair and equitable, with respect to each class of claims or interests that is impaired under, and has not accepted, the plan. 1191(b)
2. With respect to a class of secured claims  (A) the plan provides that all of the projected disposable income of the Debtor to be received in the 3-year period, or such longer period not to exceed 5 years as the court may fix, beginning on the date that the first payment is due under the plan will be applied to make payments under the plan; or (B) the value of the property to be distributed under the plan in the 3-year period, or such longer period not to exceed 5 years as the court may fix, beginning on the date on which the first distribution is due under the plan, is not less than the projected disposable income of the Debtor. 1191(c)(2)
3. The Debtor will be able to make all payments under the plan 1191(3)(A)(i) 
4. The term “disposable income” means the income that is received by the Debtor and that is not reasonably necessary to be expended— (1) for— (A) the maintenance or support of the Debtor or a dependent of the Debtor; or (B) a domestic support obligation that first becomes payable after the date of the filing of the petition; or (2) for the payment of expenditures necessary for the continuation, preservation, or operation of the business of the Debtor. 1191(d)(1) & (2)

X. Discharge. If the plan of the Debtor is confirmed, as soon as practicable after completion by the Debtor of all payments due within the first 3 years of the plan, or such longer period not to exceed 5 years as the court may fix, the court shall grant the Debtor a discharge of all debts §1192XI. Modification of Plan § 1193 A. The Debtor may modify a plan at any time before confirmation  ⸹1193(a)B. If a Plan has been confirmed under  ⸹1191(a), the Debtor may modify the plan at any time after confirmation of the Plan and before substantial consummation of the Plan  ⸹1193(b)XII. Payments § 1194 A. Payments and funds received by the trustee shall be retained by the Trustee until confirmation or denial of confirmation of a plan. If a plan is confirmed, the trustee shall distribute any such payment in accordance with the plan. If a plan is not confirmed, the trustee shall return any such payments to the Debtor 1194(a). B. The above payment mechanism is similar to chapter 13, where the Debtor makes monthly payments to the Trustee who in turn pays creditors. C. Prior to confirmation of a plan, the court, after notice and a hearing, may authorize the trustee to make payments to the holder of a secured claim for the purpose of providing adequate protection of an interest in property. 1194(c) D. ⸹1194(c) allows a secured creditor to make a motion before the Court for adequate protection payments if the Debtor is not making payments to the secured creditor, or the secured creditor does not have an “equity cushion”. XIII.  Transactions with professionals.  A person is not disqualified from employment by the Debtor solely because that person holds a claim of less than $10,000 that arose prior to commencement of the case. § 1195 A. The above provision is helpful to professional(s) who are owed money by the Debtor (less than $10,000) who do not want to waive that claim (meaning they want to be paid by the Debtor) and they want to represent the Debtor in the Subchapter V proceeding.XIV. Impaired Creditors. Subchapter V allows a Debtor to confirm a Plan without the need for obtaining the consent of a class of “impaired” creditors as is required under Chapter 11.

1. An impaired creditor is  a creditor who is paid or accepts less than what they are currently owed.

XV. United States Trustee Quarterly Fees have been eliminated. Other than the initial filing fee, fees are essentially eliminated, making the process much less expensive to the petitioner.XVI. Creditor committee requirement has been eliminated (only formed for cause in Subchapter V cases)XVII.  Cram Down has been simplified. In Subchapter 5, if the creditors can’t agree on the petitioner’s proposed plan, an application can be made to the Bankruptcy Court Judge to order the plan approved.  A. Cram Down standard-The success of the proposed plan need only be more attractive to the unsecured creditors than would a conversion to a Chapter 7 liquidation plan (creditors get $1 more under Subchapter V)XVIII. Documents needed to file under Subchapter V-the entity will require the business’ most recent balance sheet, statement of operations, cash flow statement, a federal income tax return (or a sworn statement that such a document does not exist). XIX. Plan must be submitted for approval within 90 days. However, the Bankruptcy Court may extend this deadline “if the need for the extension is attributable to circumstances for which the Debtor should not justly be held accountable.” (in the COVID-19 environment, courts are likely to grant extensions liberally)XX. Disclosure Statement not required. The Act eliminates the requirement that a disclosure statement is filed, thereby reducing costs to the Debtor and streamlining the plan confirmation process. However, the Debtor must include in the plan certain information customarily included in a disclosure statement, such as a short history of the Debtor, a liquidation analysis, and financial projections reflecting the ability of the Debtor to make the payments required by the planXXI. Trustee-under Subchapter V, a trustee is automatically appointed, but the Debtor retains control of its assets and operations. trustees have the authority to investigate the Debtor’s financial affairs. The trustee’s primary function is to facilitate a consensual plan among the Debtor and its creditors, almost like a mediator would facilitate a settlement in litigation. The trustee’s duties will include facilitating the development of a consensual reorganization plan, appearing at major hearings in the case, and ensuring that a Debtor commences making timely payments under a plan. A.Under the supervision of the Department of Justice, approximately 250 Subchapter V trustees – mostly attorneys and accountants – were selected out of over 3,000 applicants. Most Subchapter V trustees had recently received their first case assignments when the COVID-19 pandemic hit.XXII. Timing of Subchapter V Filing. Small businesses should carefully consider the timing of a Subchapter V filing: the Borrower Application Form promulgated by the U.S. Small Business Administration indicates that applicants presently subject to a bankruptcy proceeding are ineligible for the Paycheck Protection Program (PPP). XXIII. Plan Term -Consistent with current practice in Chapter 13 cases, a reorganization plan will customarily be three years in length but may be as long as five.XXIV. Impaired Class. Under Subchapter V, a plan can be confirmed without the vote of an impaired accepting class, providing that the plan does not discriminate unfairly and is deemed “fair and equitable” as to each class of claims. To meet the “fair and equitable” requirement under the Bankruptcy Code, Subchapter V requires that all of the Debtor’s projected disposable income during the length of the plan be applied to plan payments.XXV.  Elimination of the Absolute Priority Rule.  Subchapter V  eliminates the Absolute Priority Rule, under which a Debtor cannot retain an ownership interest in its assets unless all creditor claims are paid in full or the Debtor contributes new value to fund the Plan. Under Subchapter V no “new value” contributions are required as a condition of the Debtor’s asset retention. XXVI. Single Asset Real Estate Cases (“SARE”)-if a Debtor elects to file a bankruptcy case as a SARE, then they cannot also elect Subchapter V treatment. Single asset real estate is defined by the Bankruptcy Code as a single property or project that generates substantially all of the Debtor's gross income (§ 101(51B), Bankruptcy Code). If the Debtor's only business is operating the property and the property generates substantially all of the Debtor's income, a SARE typically includes the following types of properties: Shopping centers, Office buildings, Industrial and warehouse buildings and Apartment complexes. 

Subchapter V Bankruptcy Provisions can be found at:11 U.S. Code SUBCHAPTER V—SMALL BUSINESS Debtor REORGANIZATION BANKRUPTCY CODE CITES
1. § 1181. Inapplicability of other sections2. § 1182. Definitions3. § 1183. Trustee4. § 1184. Rights and powers of a Debtor in possession5. § 1185. Removal of Debtor in possession6. § 1186. Property of the estate7. § 1187. Duties and reporting requirements of Debtors8. § 1188. Status conference9. § 1189. Filing of the plan10. § 1190. Contents of plan11. § 1191. Confirmation of plan12. § 1192. Discharge13. § 1193. Modification of plan14. § 1194. Payments15. § 1195. Transactions with professionals

JHS