Tuesday, December 06, 2022

Biden administration asks the Supreme Court to take on another student-loan forgiveness lawsuit, saying the lower court blocking the debt relief 'profoundly erred

 Biden administration asks the Supreme Court to take on another student-loan forgiveness lawsuit, saying the lower court blocking the debt relief 'profoundly erred as reported by Yahoo at https://lnkd.in/egUmizFb


Jim Shenwick, Esq 212 541 6224 jshenwick@gmail.com

Sunday, December 04, 2022

CANCELING, TERMINATING, OR BREAKING A COMMERCIAL LEASE IN NEW YORK CITY AND THE GOOD GUY GUARANTY

 CANCELING, TERMINATING, OR BREAKING A COMMERCIAL LEASE IN NEW YORK CITY AND THE GOOD GUY GUARANTY

Whether it is crime, quality of life, or economics, many small businesses are looking to terminate or break their commercial leases before they expire.  Those tenants include  retailers, restaurants or office lease tenants.

Mr. Van Nieuwerburgh, a Columbia professor, calculates that New York office space on average costs about $16,000 a year per employee. “That’s real money,” he said, “and companies will try to save that”. The article quoting Mr. Nieuwerburgh can be found at https://www.nytimes.com/2022/11/17/business/office-buildings-real-estate-vacancy.html 

Many tenants looking to terminate their leases have contacted us regarding an early termination of their lease and the sticking point is usually the Good Guy Guaranty that the principal of the business signed. Strategies for dealing with Good Guy Guaranties are discussed below. 

Jim Shenwick, Esq has represented over 500 tenants in commercial lease negotiations and he has an active bankruptcy and workout law practice. 

BACKGROUND

In New York City, most commercial tenants are corporations or limited liability companies, and these entities are the tenants on the commercial office leases. The principal or principals of the corporation or LLC are almost always required to guarantee the lease in New York City.

 In New York, there are two types of lease guarantees. The full or complete guarantee of rent payment or the GOOD GUY GUARANTY, which is a specialized form of guarantee that can be limited in duration, if certain conditions enumerated in the GOOD GUY GUARANTY are met.

As example, under a  full or complete guarantee, if a tenant fails to make lease payments for 6 months and owes $50,000 for the remaining term of the lease, the Landlord can sue the guarantor for $50,000.

 A second type of guarantee is known as a Good Guy Guaranty, which limits the principal's exposure under the guarantee. To be a “good guy” means that the tenant vacates the space and delivers possession to the Landlord and the guarantor complies with the terms of the Good Guy Guaranty.

 Below is an example of how GOOD GUY GUARANTY operates.

The GOOD GUY GUARANTY  commonly provides that the guarantor’s financial exposure terminates when the following conditions are met: 1. the tenant sends notice to the Landlord that it is vacating the leased space (the notice required is generally 90 to 120 days), 2. the tenant must be current on  rent, when it sends the notice to the Landlord or when it vacates the space, 3.the space must be left “broom clean” and 4. keys for the office must be delivered to the Landlord.

 If all four conditions are met, the guarantor is released from liability under the Lease. In the event that the 4 conditions are not met, the guarantor remains liable until the lease expires.

 If a tenant closes for business or files for bankruptcy, and the conditions for the Good Guy Guaranty are not satisfied, the Landlord can or will sue the guarantor.  The statute of limitations is 6 years.

What can the Good Guy Guarantor do?

  1. The Good Guy Guarantor can engage in asset protection planning, prior to entering into the GOOD GUY GUARANTY or prior to terminating the lease, provided that that planning is allowed under  New York State law and not a fraudulent conveyance.   

  2. The Good Guy Guarantor can file for chapter 7 bankruptcy to discharge the monies owed under the Good Guy Guaranty.

  3. The Good Guy Guaranty can engage in workout negotiations with the landlord and/or threaten a bankruptcy filing  or

  4. The Good Guy Guaranty can do nothing and hope that the landlord does not sue the guarantor.

The optimal strategy depends on the facts and circumstances of each case and involves a thorough review of the lease, the guarantee and the financial situation of the guarantor. 

Clients who have guaranteed leases can contact Jim Shenwick, Esq. 212 541 6224 jshenwick@gmail.com to discuss their options.


Friday, December 02, 2022

U.S. appeals court rejects Biden's bid to revive student debt plan

 Reuters is reporting that U.S. appeals court rejects Biden's bid to revive student debt plan. The article can be found at https://www.reuters.com/world/us/us-appeals-court-rejects-bidens-bid-revive-student-debt-plan-2022-12-01/


Jim Shenwick, Esq.

Thursday, December 01, 2022

Discharging Student Loans In Bankruptcy May Be Simpler & Easier

On Nov  17, 2022 the Biden Administration announced a new path to Discharging Student Loan Debt in Bankruptcy (litigation in Bankruptcy Court).  The New York Times has a story on this topic that can be found at https://www.nytimes.com/2022/11/17/your-money/bankruptcy-student-loans.html

The new path “outlines a better, fairer, more transparent process for student loan borrowers in bankruptcy,” according to Associate Attorney General Vanita Gupta. 

Once enacted, the guidance will make it easier for attorneys at the Justice Department and Education Department to identify cases in which Federal student loans may be discharged.

The New York Times article states that under the new guidelines, debtors will complete an "attestation form" that the government will use to determine whether a discharge should be recommended for Federal Student Loans. A Debtor will have to demonstrate hardship, such as having expenses that exceed their income or having a mental or physical disability that prevents them from repaying the loan. In such cases, the government lawyers will recommend a full or partial discharge of the debtor's student loans.

Student loans can only be discharged under the current system by filing for personal bankruptcy and then filing a lawsuit or adversary proceeding.

Adversary proceedings are expensive and difficult to pursue, and according to experts less than 1 percent of personal bankruptcy filers try to discharge their student loans.

The attestation form will hopefully make the adversary proceeding simpler and easier, so more debtors will be able to discharge their loans. 

Shenwick & Associates will close following these developments, and anyone with questions should contact Jim Shenwick, Esq.  jshenwick@gmail.com  212-541-6224






Monday, November 28, 2022

The Moratorium on Federal Student Loan Payments has been extended again by President Biden to June 30, 2023

 The moratorium on federal student loan payments has been extended again by President Biden to June 30, 2023. An article on this topic can be found on cnet at https://www.cnet.com/personal-finance/loans/student-loan-pause-extended-again-heres-when-youll-have-to-start-paying/


Jim Shenwick, Esq   212 541 6224   jshenwick@gmail.com

Sunday, November 27, 2022

Healthcare providers are now Prohibited from Satisfying Medical Debt by collecting wages or placing liens on patients’ homes under a law sign by Governor Hochul on Wednesday November 23, 2022

 Governor Hochshul signed a bill on Wednesday November 23, 2022, prohibiting healthcare providers from collecting wages or liening patients' homes to satisfy medical debts. An article about the bill can be found at https://www.mytwintiers.com/news-cat/state-news/hochul-signs-bill-to-protect-new-yorkers-with-medical-debt/


If a creditor wishes to collect a debt in New York, they must sue the debtor, obtain a judgment, and then enforce the judgment.

 

Under New York law a  judgment is good for 20 years. Creditors who attempt to enforce judgments generally do three things: 1.  Lien and levy  on a debtors checking account or brokerage account, 2. Docketing the judgment against the debtor’s house and foreclosing on the judgment and 3. Wage garnishment, a legal procedure in which a person's earnings (10%) are required by court order to be withheld by an employer, and paid to a creditor in satisfaction  of a debt.

With the new law signed by the governor, medical creditors will no longer be able to garnish wages or docket judgments against a debtor's house in order to collect on those judgments. If you have any questions about the enforcement of judgments, please contact Jim Shenwick, Esq at jshenwick@gmail.com or  at 212-541-6224.



Wednesday, November 23, 2022

11 Things You Should Know About Chapter 11 Bankruptcy

 Yahoo has a very helpful article about 11 Things You Should Know About Chapter 11 Bankruptcy. 
The article can be found at https://www.yahoo.com/now/11-things-know-chapter-11-161433809.html
Jim Shenwick, Esq   212 541 6224  jshenwick@gmail.com