Please note that, in light of Governor Murphy's recent "stay at home" order in New Jersey due to the COVID-19 pandemic, McLaughlin & Nardi, LLC's attorneys and staff are working remotely at this time. However, we are still ready, willing, and able to address all of your individual and business legal needs. Please contact us by phone at (973) 890-0004 or email at info@esqnj.com. We are committed to providing the same high level of legal services that our clients have come to expect over the years. Thank you.

Articles Posted in Business Law

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As a result of the Novel Coronavirus (“COVID-19”), the federal government has passed significant legislation in an attempt to provide relief to businesses small-business-300x215struggling with economic hardships as a result of widespread closures and stay-at-home orders.  One major part of these governmental actions includes the passage of the Coronavirus Aid, Relief, and Economic Security Act (also known as the “CARES Act”) on April 2, 2020.

The CARES Act provides for approximately $2 trillion in aid through expanded unemployment assistance, individual relief checks, tax credits, loans, and grants to businesses which were closed or significantly effected by COVID-19, and funding to hospitals and health care facilities. Of this, approximately $350 billion was allocated to the CARES Act’s Paycheck Protection Program (“PPP).   When that money was almost immediately sought by the millions of businesses seeking assistance, an additional $175 billion was additionally allocated.

The PPP limited its funding to each company to two and a half times the company’s average monthly payroll costs.  While the PPP is considered a loan program, the funds may largely (or entirely) be forgiven as long as the company uses the funds for approved expenses. The details of exactly which expenses would be considered approved and how these funds could be used has been the subject of much uncertainty over the past several weeks.  Indeed, the SBA (Small Business Administration) has posted additional rules and guidance on the matter more than 10 times in two months.

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As a result of the Coronavirus (COV-19), millions of small businesses have been forced to close their business operations entirely with seemingly no end in sight. small-business-300x200 Naturally, this has led to a spike in bankruptcy filings.  However, many small businesses have held out hope for federal stimulus aid before deciding on whether bankruptcy is the right option for them.

The enactment of a new bankruptcy law, the Small Business Reorganization Act, may provide small businesses suffering from COV-19 related financial issues with relief.  The purpose of the act was to make the benefits that larger business entities may take advantage of when filing for a Chapter 11 reorganization bankruptcy easier to access for smaller business entities seeking relief from debt without going out of business.  The Act simplifies the process by allowing small businesses to file a Subchapter 5 bankruptcy reorganization.

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national-gallery-of-art-1380105-m-300x248Since the COV-19 outbreak began, more than 22 million Americans have filed for unemployment.  The increase in unemployment filings have been the result of businesses of all sizes being forced to shut down entirely or significantly limit their operations.  As a result, many people, both employers and employees, are seeing less income or no income at all while still being expected to pay their monthly payments such as rent, mortgage, car loan, credit card bills, and insurance.  These financial obligations are especially devastating for people and businesses that were already having trouble making those monthly payments prior to the COV-19 outbreak.

If a person and/or business is experiencing financial trouble, has significant debt, and/or is subject to collection actions such as a foreclosure or a collections lawsuit, bankruptcy may be a potential remedy.  One of the major benefits of filing for bankruptcy is the immediate automatic stay of collection actions and lawsuits.

The type of bankruptcy that may be appropriate for an individual and/or business depends on several factors.  For more information on the different types of bankruptcies, check out our posts on Chapter 7, Chapter 11, and Chapter 13 bankruptcies.

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The Coronavirus (COV-19) has had a negative impact on everyone physically, mentally, and financially.  Businesses are no different.  Small and medium sized businesses are especially vulnerable in these troubled times.  They are faced with difficult decisions such as whether to temporarily lay off their employees or which bills to pay when little or no revenue is being received.

At McLaughlin & Nardi, LLC, we focus a portion of our practice on advising small and medium sized businesses when faced with these difficult financial decisions.  When a business becomes overwhelmed and unable to meet its financial obligations, filing a Chapter 11 bankruptcy may be a great means to get the business back on track.

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As a result of the Coronavirus (COV-19), the unemployment rate has increased rapidly and reports suggest that the unemployment rate may reach 30% in the country.   This immediate loss of income for many individuals and families have left them unable to meet their continuing financial obligations such as paying for their mortgage, credit card bills, medical bills, etc.

If an individual or family is in a position where they are behind on their mortgage or other bills, filing a Chapter 13 bankruptcy may be good option for getting them back on track financially.

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The need to file bankruptcy can come quickly and abruptly due to a serious life event such as a serious medical diagnosis that results in large medical bills or being terminated or laid off from a job that results in a loss of income.  Many individuals have experienced this as a result of the Coronavirus (COV-19), which has caused these individuals to feel as though they are “drowning in debt.”

If an individual or family is in a position where they are significant debt and cannot pay their bills, filing a Chapter 7 bankruptcy may be an appropriate step to get them a “fresh start” financially.

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The Federal and State Government has set up avenues of relief to assist businesses in these hard times in the form of loans and grants.  Below is rundown of the New

Jersey Economic Development Authority (NJEDA) Small Business Emergency Assistance Grant Program, through which New Jersey is offering Coronavirus relief to small businesses.

What is it?

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In this time of economic uncertainty due to the coronavirus and the social distancing required to slow it, our attorneys and staff are helping New Jersey sba-disasterbusinesses seek financing under the new Federal Small Business Paycheck Protection Program.  The basic elements of the program are below.  Call us to obtain help. Applications are being accepted starting April 3rd, and funding is limited, so time is of the essence.

Small Business Paycheck Protection Program

The new Paycheck Protection Program by the Federal Government will provide small businesses with funds to meet payroll and benefits costs, payroll taxes, vacation and sick leave payments, rent, mortgage interest, and utilities for up to  for up to eight weeks.  If the funds are used solely for these expenses and the number of the business’s employees stays the same, the loan can be fully forgiven (it is expected that seventy five percent of the forgiven amount will go to payroll expenses).  In other words, the loan is converted to a grant and does not need to be repaid.  The requirement can be met by retaining employees or quickly rehiring them by June 30, 2020.  If the number of full-time employees is reduced then the forgiveness will be reduced, and a pro rata portion of the loan will need to be repaid.  Only one loan may be taken.  The non-payroll costs need to have been incurred before February 15, 2020.

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As a result of the coronavirus (“COVID19”), the federal government has taken significant action to provide relief to individuals and business struggling with civil-service-jobs-1-300x200economic hardships as a result of lost business during widespread closures and stay-at-home orders. The first major legislation passed by the federal government was the Families First Coronavirus Response Act which provided job protection and paid leave provisions.  Now, the government has recently passed the Coronavirus Aid, Relief, and Economic Security Act (also known as the “CARES Act”).

The CARES Act provides for approximately $2 trillion in relief aid through expanded unemployment assistance, individual relief checks, tax credits, loans, and grants to businesses which were closed or significantly effected by COVID-19, and funding to hospitals and health care facilities.

Small businesses in particular which are struggling with the current situation economically should look into applying for one or more of these relief options.  For example, a business may apply for a $10,000 immediate advance to cover emergency costs that they are unable to pay because of the COVID-19 situation.  Expenses covered would, of course, have to be legitimate business costs such as payroll and utilities.

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In the time of the Coronavirus (COVID19), many people are concerned about the likelihood of needing to file for unemployment benefits in New Jersey in the near future.

Certainly, many people will be in need of New Jersey State assistance in 2020 and beyond as a result of the coronavirus pandemic and its effects.

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