By Salene Mazur Kraemer, Esq.
Partner, Bernstein-Burkley

On Monday, June 15, the Federal Reserve launched the long-awaited Main Street Lending Program to support lending to small- and medium-sized businesses with fewer than 15,000 workers.

You might wonder how this program differs from the Paycheck Protection Program (PPP), which debuted in April 2020. The two programs are very different from one another and offer unique benefits, depending on your company.

Here’s what you need to know about the two programs aimed at helping relieve the financial distress caused by COVID-19.

What are the differences between Main Street Lending and the PPP?

The Main Street Lending Program loans, administered by the Federal Reserve, are not forgivable; however, they do have considerably low interest rates compared to other business loans. The PPP loans, managed by the Small Business Association, are forgivable, as long as they are used for payroll and other specific expenses under the loan parameters.

How do I get a Main Street Lending loan?

You must apply through a bank, which can then sell 95 percent of the loan to the Fed, transferring most of the risk to the central bank. While this program was initially announced earlier this year in March, one of the reasons why it took so long to put into action is that the Fed was trying to get the details right, since they had never participated in anything like this before.

Some of the considerations for this program were the adjustments to the loan amounts: The minimum loan you can take out is $250,000 and the maximum is $300 million. Also, maturities are extended to five years, and borrowers don’t have to pay any interest in the first year and can start paying principal after two years.

Working with Banks

Our Bernstein-Burkley team has broad experience and good working relationships with multiple lending institutions. Our attorneys are equipped to discuss the Main Street Lending program and other financing options with you.

For more information, call us at (412) 456-8100 or email us at info@bernsteinlaw.com. 

Five Bernstein-Burkley attorneys have been selected to the 2020 Pennsylvania Super Lawyers list.

Robert S. Bernstein – Top Rated Attorney Bankruptcy: Business

Kirk B. Burkley – Top 50 Pittsburgh Attorney, Top Rated Attorney Bankruptcy: Business

Nicholas D. Krawec – Top Rated Attorney Creditor Debtor Rights

Mark A. Lindsay – Top Rated Attorney Creditor Debtor Rights

Salene Mazur Kraemer – Top Rated Attorney Bankruptcy: Business

Each year, no more than five percent of the lawyers in the state are selected by the research team at Super Lawyers to receive this honor.

Two Bernstein-Burkley associates were also included on the 2020 Pennsylvania Rising Stars list:

James M. Berent – Rising Stars Real Estate

Brian W. Walsh – Rising Stars Business & Corporate 

Super Lawyers, a Thomson Reuters business, is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement. The annual selections are made using a patented multiphase process that includes a statewide survey of lawyers, an independent research evaluation of candidates and peer reviews by practice area. The result is a credible, comprehensive and diverse listing of exceptional attorneys.

The Super Lawyers lists are published nationwide in Super Lawyers Magazines and in leading city and regional magazines and newspapers across the country. Super Lawyers Magazines also feature editorial profiles of attorneys who embody excellence in the practice of law. For more information about Super Lawyers, visit SuperLawyers.com.

By James M. Berent, Esq.
Bernstein-Burkley

Kit F. Pettit, Esq.
Bernstein-Burkley

With nearly everything being impacted by COVID-19, it’s not a surprise that real estate taxes are also going to be affected. Occupancy changes, consumer adjustments, loss of rental income and general profit loss are already disrupting real estate businesses and landlords, and even with stay-at-home orders lifted, many companies will not survive.

The Income Approach

One of the many financial consequences of COVID-19 is the reduction in property values, and these significant reductions in value may result in property owners paying excessive real estate taxes. The market value of commercial real estate is often determined based on the income approach, so any reduction in income due to COVID-19 will spell the same for the value of property for tax assessment purposes.

As the most frequently used method for valuing commercial properties, the income approach evaluates property as an investment, incorporating elements like income, expenses, investment risk, and property stabilization.

Since the majority of states and counties determine annual property assessments based on the value as of January 1^st, the reduction in income for 2020 will impact the market value of the property for tax year 2021.

Pennsylvania Property Tax Assessments

Based on this analysis, Pennsylvania property owners may want to consider seeking 2021 property tax assessment reductions.

Pennsylvania property owners in many counties can already start filing their 2021 property tax appeals. In every county except Allegheny, those appeals will need to be filed by August 1, 2020 or September 1, 2020. Allegheny County property owners will file their 2021 tax assessment appeals between January 1, 2021 and March 31, 2021. While property owners haven’t yet experienced the effects COVID-19 will have on them in 2021, they can still file and secure an appeal to next year’s tax assessment and start considering whether their property might receive a lower assessment value.

What to Do with Your Property Tax Assessment?

It’s important to be proactive about 2021. Business revenue downturn due to COVID-19 should be applied to next year’s assessment, as it would be appropriate to seek an assessment reduction. It’s never too early to start thinking about next year, as the effects of COVID-19 will still surely be felt everywhere.

Bernstein-Burkley

Bernstein-Burkley is ready to field any questions you might have about property tax assessment and how the current climate affects it. If you feel like you might have a circumstance that could impact your property tax assessment, reach out to our legal team at info@bernsteinlaw.com or call (412) 456-8100.

By Salene Mazur Kraemer, Esq.
Bernstein-Burkley

On Thursday, April 30, 2020, the IRS released Notice 2020-32 [referencing Internal Revenue Code section 265(a)(1)] establishing whether expenses are tax-deductible if paid with proceeds from the Paycheck Protection Program. This is an important IRS Notice that impacts a company’s taxable net income.  

If a business has paid qualifying forgivable expenses with the proceeds of a Paycheck Protection Program loan, those expenses are not tax deductible. However, if a business must repay any portion of the PPP loan back because those expenses did not qualify, those non-forgivable expenses are tax deductible. This prevents a double tax benefit from taking place.

Businesses across the country have applied for Paycheck Protection Program loans, and one of the hallmarks of the program is loan forgiveness. The business must meet forgiveness guidelines, like using the PPP loan to pay specific qualifying forgivable expenses including payroll costs, rent, utilities, and mortgage interest, etc., during an 8-week period, starting from when the loans are received. Not more than 25% of the forgiven amount may be used for non-payroll costs. A business will also owe money if it does not maintain its staff headcount and payroll.

Read the full Notice here. 

The COVID-19 crisis has impacted businesses of every size, and Bernstein-Burkley, P.C., is here to help.

For more than 50 years, Bernstein-Burkley, P.C., has advised clients on every issue arising from financial distress, which has made us more than adequately prepared to handle the fallout from the COVID-19 pandemic. 

Our office remains open remotely, and we are committed to staying up-to-date on legal news and issues related to COVID-19. 

Updates and Alerts

What Lawyers and Everyone Can Do To Be More Personable in a COVID-19 World – July 14, 2020

Residential Eviction Moratorium Expanded to End of August; CARES Relief for Renters and Homeowners Having Financial Difficulty – July 10, 2020

COVID-19 Relief Statewide Small Business Assistance is Live – July 8, 2020

Main Street vs. PPP – June 19, 2020

How Will COVID-19 Affect Property Tax Assessments? – May 20, 2020

Paycheck Protection Program Tax Update: Which PPP Loan Expenses are Tax Deductible? – May 1, 2020

Info on the Paycheck Protection Program – April 1, 2020

The CARES Act: Small Business Economic Assistance Update – March 30, 2020

Recent Articles

Uncharted Waters – Pittsburgh Business Times, May 21, 2020

‘It’s going to be a tidal wave’ – PPP delays bankruptcy filings, acceleration expected later this year – Pittsburgh Business Times, May 8, 2020

Bankruptcy Court Still Currently Operating with Essential Staff – April 9, 2020

Webinars

Stabilization Strategies for Women-Owned Businesses in the Age of COVID-19 and Tips for Work/Life Balance – May 14, 2020

In the COVID-19 Crisis, Learn the Best Practices in Business Credit Management – April 15, 2020

Navigating COVID-19 Payroll and Expense Relief & Strategies for Stabilizing Your Business – April 3, 2020

This article appeared in the April 10, 2020 edition of Lawyers Journal, which is published fortnightly by the Allegheny County Bar Association. 

Keri Ebeck, Esq.
Partner at Bernstein-Burkley

As the United States and other countries begin to process dealing with the pandemic of the new coronavirus, the federal courts collectively have made it known that business shall continue in the most normal fashion that it can. Our judicial integrity and economy depend on the courts functioning on a daily basis. The federal courts have each issued their own orders of continued operation and procedures for dealing with ongoing court matters while recognizing the importance of social distancing and combating this virus.

Recently, Judge D. Brooks Smith, Chief Judge of the U.S. Court of Appeals for the Third Circuit, issued a statement in which he was quoted, “While all of our judges and court employees recognize the seriousness that attaches to the declaration of a national emergency….the Third Circuit is not in the midst of a judicial emergency.”

During a discussion amongst the ACBA Bankruptcy and Commercial Law section (which includes attorneys, law clerks, court staff and Judges of the Western District of Pennsylvania Bankruptcy Court), it was agreed that the bankruptcy process must move forward for both debtors and creditors, and that this process should not be stalled or delayed in order to protect the integrity of the bankruptcy process.

As a section member and an attorney whose firm represents both commercial debtors and creditors, Kirk Burkley of Bernstein-Burkley said that “the financial need of companies and individuals doesn’t stop due to COVID-19; in fact, those needs are exacerbated. Many debtor-in-possession loans have a very specific shelf life. It is important for the bankruptcy process to continue so that debts can be restructured and companies and individuals survive, while creditors make appropriate recoveries so they can pay their employees and vendors.”

That is exactly how the Bankruptcy Court in the Western District of Pennsylvania is handling its everyday court business. The court is operating with essential staff in both the courthouses in Erie and Pittsburgh. Most, if not all hearings, are to be conducted telephonically through a court call. Chief Judge of the Bankruptcy Court of the Western District of Pennsylvania, Carlota M. Böhm, issued a standing order on March 13, 2020 (available at www.pawb.uscourts.gov/news/standingorder-20-204-telephonic-appearancehearings-mandatory).

According to Judge Böhm, “The Bankruptcy Court is open and operating efficiently. The majority of the staff is operating remotely but processing all matters and responding to inquiries. All hearings are being conducted telephonically. If anyone needs help they should contact my office or the clerk of court.”

Additionally, the Court has communicated that given the fluidity of the situation, people should consult the court’s website regularly for updates. That site is: www.pawb.uscourts.gov/. The Court has stated that while protecting the bankruptcy process, it recognizes that these times require flexibility and adaptability, prompting the court to temporarily revise many of its processes, procedures, and forms, but it’s business as usual. The message also received from the court is that judges will be inclined to grant continuances, but normal processes of filing motions in each case need to be followed and each case will be reviewed on a case by case basis.

Ronda Winnecour, Chapter 13 Trustee for the Western District of Pennsylvania, is adept to keeping her office and procedures moving forward as well during this time. Winnecour indicated that, “We are doing our very best to get monies from debtors to creditors each month.” Winnecour also is incredibly cognizant about local attorneys and law firms who rely upon her disbursement checks each month to make their own payroll and also processing debtor refunds quickly. Winnecour’s office is operating remotely, but was still able to get its March disbursement completed.

Section member Brian Thompson of Thompson Law Group, who represents debtors in all chapters of bankruptcy, agrees that the bankruptcy process must move forward on a regular basis.

“The bankruptcy process was designed to offer individuals and businesses relief from overwhelming financial burden. That is why it is so important during the health crisis, which was quickly turned into an economic crisis, for the bankruptcy court to remain open, so that those who qualify can seek the relief necessary for a fresh start in life,” he said.

In times like these, keeping up to date with the court’s orders and mandates is important as the pandemic is a fluid situation that is ever evolving. The bankruptcy process is crucial to debtors being able to seek relief under the bankruptcy code, and therefore, it must remain a constant. Around the country, courts are issuing orders and directives and practitioners should keep up to date in each jurisdiction in which they practice.

For more information on the federal judiciary preparedness for coronavirus (COVID19), please go to: www.uscourts.gov/news/2020/03/12/judiciary-preparednesscoronavirus-covid-19. 

Ebeck is Chair of the Bankruptcy and Commercial Law Section of the ACBA.

*The following post contains spoilers for the Netflix documentary Tiger King.*

Keri Ebeck, Esq.
Partner at Bernstein-Burkley

Ray Wendolowski, Esq.
Partner at Bernstei-Burkley

The only thing people have been talking about over the past few weeks is the global crisis caused by COVID-19 and the Netflix documentary “Tiger King.” It’s obvious why we are all discussing and worrying about COVID-19, and the obsession with “Tiger King” also seems obvious: What better way to take our minds off of the virus and everything that comes with it than a documentary about a gun-toting, drug-using, mullet-having, tiger-obsessed, convicted felon?

We watched “Tiger King” like everyone else, but while we watched we couldn’t help but obsess about all of the creditors’ rights activity. For those who haven’t seen the documentary, Carole Baskin (“Baskin”) obtained a million-dollar judgment against Joseph Maldonado-Passage a/k/a “Joe Exotic” as a result of Joe Exotic’s improper use of Baskin’s trademarks. That’s where the fun begins, at least for a creditors’ rights attorney.

For a portion of the documentary, we get to see a glimpse of what Baskin and her lawyers tried to do to collect from Joe Exotic. While that may have been a low point for most viewers, we found it wildly entertaining. Surely, Baskin and her lawyers tried to do more to collect from Joe Exotic than what was revealed in the series, but let’s explore some of what we saw Baskin do and some suggestions for additional actions she should have taken.

In the documentary, we know that Baskin filed fraudulent transfer actions against Joe Exotic and his parents after he transferred his animal park into his parents’ names and she attempted to seize and sell some of Joe Exotic’s assets. That was a good start, but she could have done even more.

For instance, after Joe Exotic filed for bankruptcy, Joe Exotic’s assets became property of the estate, and therefore, any assets were under the control of the appointed Chapter 7 Trustee. Baskin could have attended the meeting of creditors (i.e. 341 meeting).

Baskin also should have filed a proof of claim, as the Chapter 7 was determined to be an asset case. Additionally, Baskin could have filed an adversary for fraudulent transfer under 11. U.S.C. §547.  Within Joe Exotic’s bankruptcy, the Trustee filed a fraudulent transfer adversary, but it was against another Defendant. As the bankruptcy court had jurisdiction, Baskin could have brought her actions there. Fortunately for Baskin, Joe Exotic did not receive a discharge in his bankruptcy, as his discharge was waived; therefore, once the case closed and the Chapter 7 Trustee abandoned any further assets, Baskin was free to proceed in state court.

Once Joe Exotic’s bankruptcy closed, Baskin could have pursued a fraudulent transfer action seeking to unwind the additional efforts that Joe Exotic took to transfer his animal park out of his own name or could have garnished the current owners of the animal park in an attempt to recover any funds the current owners still had to pay to Joe Exotic. Once the sale of the animal park was reversed, Baskin then could have moved to seize the animals located on the park and likely could have foreclosed on the real property.

All of these actions likely would have caused Joe Exotic to make other moves himself, but if Baskin pursued all of these avenues at once, she could have boxed in Joe Exotic and limited his options or even ended up with judgments against some of Joe Exotic’s transferees.

Bottom line: While the Big cats are away, the mice shall play, so it’s imperative as a creditor to be aware of all avenues of collections, bankruptcy matters and legal actions to keep a debtor as tricky as the “Tiger King” from getting away with his antics.

What You Need to Apply

• Salary, wage, commission, or similar compensation;
• Payment of cash tip or equivalent;
• Payment for vacation, parental, family, medical, or sick leave;
• Allowance for dismissal or separation;
• Payment required for the provisions of group health care benefits, including insurance premiums;
• Payment of any retirement benefit;
• Payment of state or local tax assessed on the compensation of the employee.

Contact Us Today

The Coronavirus Aid, Relief, and Economic Security Act being commonly referred to as the ‘‘CARES Act’’ will provide emergency assistance and health care response for individuals, families and businesses affected by the 2020 coronavirus pandemic. The CARES Act itself is 883 pages long and contains several different Divisions, Titles and Sections including Title I, Keeping American Workers Employed and Paid Act, and Section 1102 known as the Paycheck Provision Program.

Under this new Act, small businesses are eligible for unsecured, no-fee loans to cover business interruptions from COVID-19. During the covered period defined as February 15, 2020 through June 15, 2020, an eligible recipient may use the proceeds of the covered loan for various business-related expenses, including (i) payroll costs; (ii) costs related to the continuation of group health care benefits during periods of paid sick, medical or family leave, and insurance premiums; (iii) employee salaries, commissions, or similar compensations; (iv) payments of interest on any mortgage obligation (which shall not include any prepayment of or payment of principal on a mortgage obligation); (v) rent (including rent under a lease agreement); (vi) utilities; and (vii) interest on any other debt obligations that were incurred before the covered period.

It is important that any recipient of funding under the Paycheck Provision Program is aware of what the term “payroll costs” means and what it does not include, so any such funds are used in compliance with the provisions of the stimulus loan program. Specifically, under Section 1102(a)(2)(A)(vii), “payroll costs” means:

(1) The sum of payments of any compensation with respect to employees that is a:

• Salary, wage, commission, or similar compensation;
• Payment of cash tip or equivalent;
• Payment for  vacation, parental, family, medical or sick leave;   
• Allowance for dismissal or separation;
• Payment required for the provisions of group health care benefits, including insurance  premiums;
• Payment of any retirement benefit; or
• Payment of state  or  local  tax  assessed on  the  compensation  of  employees; and

(2) The sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self-employment, or similar compensation and that is in an amount that is not more than  $100,000 in 1 year, as prorated for the covered period.

“Payroll costs” shall not include:

• The compensation of an individual employee in excess of an annual salary of $100,000, as prorated for the covered period;
• Taxes imposed or withheld under chapters 21, 22, or 24 of the Internal Revenue Code of 1986 during the covered period;
• Any compensation of an employee whose principal place of residence is outside of the United States;
• Qualified sick leave wages for which a credit is allowed under section 7001 of the Families First Coronavirus Response Act (Public Law 116–127); or
• Qualified family leave wages for which a credit is allowed under section 7003 of the Families First Coronavirus Response Act (Public Law 116–127).

If your company is eligible for and receives a stimulus loan, it is important that the proceeds are used properly as your company may be eligible for forgiveness for a portion of the loan equal to the amount spent by the company on payroll costs, mortgages, rent and utilities during the eight-week period following the loan, with the amount of forgiveness to be reduced proportionally by reductions in the number or pay of employees compared to certain prior year benchmarks [to be further clarified under regulations to be issued by the SBA within thirty (30) days of enactment of the CARES Act]. It is very important that any stimulus loan proceeds are used in a manner consistent with the applicable provisions of the Act to receive forgiveness.

For additional guidance on Covid-19 issues affecting your business, please do not hesitate to contact Bernstein-Burkley, P.C. We continue to work remotely each day on a full-time basis and are here to support and guide you through the challenging times we are facing.

Contact Bernstein-Burkley at (412) 456-8100 or via email at info@bernsteinlaw.com. 

Many businesses are experiencing (or expecting) fiscal challenges as a result of the COVID-19 pandemic. For more than 50 years, Bernstein-Burkley has advised clients dealing with virtually every issue arising from financial distress. We are prepared to assist any company impacted by the current economy. Over the next several months, businesses and organizations are going to struggle. Unfortunately, for many industries, they are already feeling the consequences. While the virus itself is new, many of the tools we use every day can help your company right now.

Who We Are

Bernstein-Burkley is a law firm that for more than 50 years has been committed to providing partnerships that offer clients a peace of mind during economic turbulence. Managing partner Kirk B. Burkley currently serves as President of the American Board of Certification, an organization that certifies specialists in the area of bankruptcy and creditors’ rights; managing partner Robert S. Bernstein and partner Harry Greenfield are past presidents. Additionally, both Bernstein and Greenfield are members of the esteemed American College of Bankruptcy.

Our team is seasoned and knowledgeable, with partners averaging 20 years of practice in the areas of bankruptcy and creditors’ rights. They are regularly recognized as the best in their field by Super Lawyers and the Best Lawyers in America. We have more board-certified creditors’ rights specialists than any other law firm in the Commonwealth of Pennsylvania.

What We Do

Headquartered in Pittsburgh, with offices in Cleveland and Wheeling, our team is able to cover cases nationwide in the areas of:

• Bankruptcy & Restructuring
• Creditors’ Rights
• Commercial Litigation

We’re Ready to Help – Call Us Today

We realize that tough times lie ahead, and we are here to get you through, whether it’s answering complex questions or simply a phone call. We are trained for these circumstances and will work tirelessly to serve our clients’ best interests.

Through the COVID-19 crisis, our office has remained open, with much of our staff and attorneys working remotely, to meet our clients’ needs.

If you need assistance, please don’t hesitate to give us a call at (412) 456-8100 or reach out via info@bernsteinlaw.com.

In order to keep Bernstein-Burkley running smoothly, we have a hard-working, dedicated staff. Meet one of our paralegals, Katelyn Bowles, who specializes in commercial real estate.