California is the first state to have a payment transparency law in place for state agencies. The state now requires agencies to post to their websites information about a project that will help subcontractors and suppliers know their payment rights. Gov. Jerry Brown signed AB1223 into law earlier this month to hold state agencies and prime contractors more accountable.
Two major changes are now in effect across the country that will help small businesses grow and gain new opportunities. The Small Business Administration (SBA) announced changes to the Surety Bond Guarantee Program earlier this month, and they became official Sept. 20. The amendments from the SBA were initially proposed and published in the Federal Register last month.
The United States Court of Appeals for the 3rd Circuit, in In re World Imports Ltd., recently held that a debtor, World Imports, had received goods when the debtor or its agent physically received the goods, not when the goods were delivered to a common carrier for shipment. This decision was made in conjunction with determining the allowed amount of trade creditors’ Section 503(b)(9) administrative priority claims for goods purportedly received by World Imports within 20 days of its bankruptcy filing.
A recent decision by the Delaware Bankruptcy Court, in In re FAH Liquidating Corp., addressed the issue of whether a transfer of a debtor’s assets that occurred outside of the United States can be avoided and recovered under the Bankruptcy Code. The Bankruptcy Court held that a trustee or debtor-in-possession can avoid and recover fraudulent conveyances (and, by extension, preferential transfers) that occurred outside of the U.S., following decisions by the Bankruptcy Court for the Southern District of New York and the U.S. Fourth Circuit Court of Appeals.
A new proposed national law would provide greater transparency to subcontractors and suppliers with respect to change orders on federal construction jobs.
Dubbed the “Small Business Know-Before-You-Bid Construction Transparency Act of 2017” or H.R. 2350 and introduced by Rep. Don Bacon of Nebraska, the bill would provide more insight as to how long a particular federal agency takes to review, approve and pay for change orders; the validity of payment assurances, such as payment bonds; and the timeliness of monthly payments.
A state lawmaker in Florida who has told the construction industry he believes homeowners should have no responsibility for payment to subs and suppliers and wants to eliminate their lien rights on most residential construction may introduce legislation detrimental to the industry this week in Florida’s House Commerce Committee.
That legislation, supported by Florida House Speaker Richard Corcoran, could be attached as an amendment to a building code-related bill called “An Act Relating to Construction” or HB 1021, as early as April 5, according to Deborah Lawson, a lobbyist with Lawson Governmental Affairs who is supporting Florida’s NACM Improved Construction Practices Committee (ICPC). The ICPC is a joint committee comprised of members from the NACM South Atlantic and NACM Tampa Affiliates.
On March 29, the United States Supreme Court issued its ruling in Expressions Hair Design et al. v. Schneiderman, in which a group of retailers challenged New York’s prohibition on credit card surcharges. The challenged New York statute, N.Y. General Business Law § 518, provides that “No seller in any sales transaction may impose a surcharge on a holder who elects to use a credit card in lieu of payment by cash, check or similar means.”
Prior to 2013, Visa and MasterCard rules mostly prohibited U.S. merchants from imposing surcharges for credit card payments, rendering the New York statute essentially redundant. However, as a result of a massive 2013 antitrust settlement (which was recently overturned by the Second Circuit Court of Appeals and is in the process of being re-engineered), Visa and MasterCard amended their rules to permit merchants to surcharge credit card payments, bringing the New York statute and similar laws in a handful of other states back into the news—and in several instances, into court.
Bankruptcy courts do not have the legal power to ignore the claims priority scheme in distributing settlement proceeds in connection with a Ch. 11 dismissal, the Supreme Court held Wednesday.
The 6-2 ruling in the case of Casimir Czyzewski, et al. v. Jevic Holding Corp., et al., found that the Third Circuit and the United States Bankruptcy Court for the District of Delaware incorrectly affirmed a structured settlement that skipped the claims of dissenting midpriority unsecured creditors, who were truck drivers of the trucking company Jevic.
“A distribution scheme ordered in connection with the dismissal of a Chapter 11 case cannot, without the consent of the affected parties, deviate from the basic priority rules that apply under the primary mechanisms the Code establishes for final distributions of estate value in business bankruptcies,” the Court’s opinion, delivered by Justice Stephen Breyer, stated. “Put somewhat more directly, we would expect to see some affirmative indication of intent if Congress actually meant to make structured dismissals a backdoor means to achieve the exact kind of nonconsensual priority-violating final distributions that the Code prohibits in Chapter 7 liquidations and Chapter 11 plans,” the Court said.
NACM, as part of its ongoing Government Affairs Committee, has gathered a group of nearly a dozen elite trade credit professionals as part of a committee tasked specifically with setting a course for the association’s effort to push reform of Chapter 11 in 2015. The committee aims to establish a strong NACM legislative platform, which will be brought to Capitol Hill this year. Among Bankruptcy Code areas being reviewed by the NACM committee are preferences, Section 503(b)(9), venue provisions, creditors’ committees, executory contracts and provisions for very small businesses.
At present, no existing proposals for deep reform of the U.S. Bankruptcy Code carry real momentum in either house of the U.S. Congress. However, given that the current makeup of the U.S. Congress includes some committee leadership that has been amenable to pushing past changes considered fair and friendly to B2B creditors, bankruptcy reform will very likely find its way onto the radar of top federal lawmakers within the next year.