NY State Senate Bill 2023-S3033

Senate Bill S3033

2023-2024 Legislative Session

Establishes a temporary state assistance fund to provide legal counsel in certain bankruptcy proceedings and providing for the administration thereof

download bill text pdf

Current Bill Status - In Senate Committee Finance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 03, 2024	referred to finance
Jan 26, 2023	referred to finance

2023-S3033 (ACTIVE) - Details

See Assembly Version of this Bill:: A368
Current Committee:: Senate Finance
Law Section:: Executive Law
Laws Affected:: Add §94-d, Exec L
Versions Introduced in Other Legislative Sessions:: 2019-2020: S9022, A11084
2021-2022: S1142, S8111, A5922

2023-S3033 (ACTIVE) - Summary

Establishes a temporary state assistance fund to provide legal counsel for bankruptcy proceedings under chapter eleven of the federal bankruptcy code; provides for the administration thereof.

2023-S3033 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S3033

SPONSOR: CLEARE
 
TITLE OF BILL:

An act to amend the executive law, in relation to establishing a tempo-
rary state assistance fund to provide legal counsel in certain bankrupt-
cy proceedings and providing for the administration thereof

 
PURPOSE OF BILL:

To provide free legal counsel for small businesses adversely affected by
the COVID-19 so that they may take advantage of recently expanded feder-
al bankruptcy protections. Such fund is necessary to ensure that small
businesses reorganize debt and get a fresh start before the timeline
closes on a greater debt threshold permitted under the federal CARES
Act.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section (1) provides this act shall be known as may be cited as the
SMART ("Save Merchants and Retail Tenants") Act.

§ 2 amends the Executive law by adding new section 94-d; Subdivision

(1) provides relevant definitions Subdivision (2) provides that all
eligible businesses shall have access to legal services in certain small
business bankruptcy cases.

The subsection further provides for the creation of a legal services
fund and details program limitations.

- Subdivision (3) provides guidelines for administration and oversight
of the legal fund including competent representation, targeting of
grants, and general administration over the program.

- Subdivision (4) provides the requirements for the legal fund to fully
comply with the intent of the legislation.

Section (3) sets the effective date.

 
JUSTIFICATION:

Small businesses are essential to maintaining a vibrant and diverse
community. COVID-19 has brought great strain upon small business, forc-
ing many to either temporarily shut down or scale back their operations.

The federal CARES Act gave struggling small business an opportunity to
take advantage of the more efficient and cost-effective Subchapter 5 of
Chapter 11 of the Bankruptcy Code by increasing the debt limit for
eligible debtors from about $2.7 million to $7.5 million. This provision
also permits a debt cramdown in cases where a Chapter 11 plan does not
discriminate unfairly and is "fair and equitable" to each impaired non-
accepting class.

Unfortunately, the debt limit reverts to the $2.7 million threshold on
March 28, 2021, and many small businesses are not aware of this limited
opportunity. We are faced with a limited budget to assist with the
financial recovery of small businesses in response to COVID-19 and
government forced shutdowns, this temporary fund to provide legal
assistance will provide the best possible return on investment to
protect our Main Street businesses. It's a SMART investment for New York
to rebuild small businesses, protect the character of our communities,
and prevent the spread of vacant neighborhood storefronts.

 
PRIOR LEGISLATIVE HISTORY:

2019-20: 89022/A11084

 
FISCAL IMPLICATIONS:

To be determined.

 
EFFECTIVE DATE:
This act shall take effect immediately

2023-S3033 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   3033
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                             January 26, 2023
                                ___________
 
 Introduced  by  Sen.  CLEARE -- read twice and ordered printed, and when
   printed to be committed to the Committee on Finance
 
 AN ACT to amend the executive law, in relation to establishing a  tempo-
   rary  state  assistance fund to provide legal counsel in certain bank-
   ruptcy proceedings and providing for the administration thereof

   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Short  title. This act shall be known and may be cited as
 the "save merchants and retail tenants (SMART) act".
   § 2. The executive law is amended by adding a new section 94-d to read
 as follows:
   § 94-D. TEMPORARY STATE ASSISTANCE TO FUND LEGAL SERVICES  IN  CERTAIN
 BANKRUPTCY PROCEEDINGS. 1. DEFINITIONS. AS USED IN THIS SECTION:
   (A) "ADMINISTRATOR" MEANS THE NEW YORK OFFICE OF COURT ADMINISTRATION.
   (B) "COVERED BUSINESS" MEANS ANY SMALL BUSINESS, NOT-FOR-PROFIT CORPO-
 RATION,  LIMITED PARTNERSHIP, LIMITED LIABILITY COMPANY, LIMITED LIABIL-
 ITY PARTNERSHIP,  AS  WELL  AS  OTHER  MISCELLANEOUS  BUSINESSES,  WHICH
 CONDUCTS  A  MAJORITY  OF  ITS  BUSINESS  IN THE STATE AND WAS ADVERSELY
 AFFECTED BY COVID-19 OR PUBLIC HEALTH RESTRICTIONS ENFORCED BY THE STATE
 DURING THE COVID-19 PANDEMIC, WHICH ARE ELIGIBLE FOR  RELIEF  UNDER  THE
 FEDERAL SMALL BUSINESS REORGANIZATION ACT, AS AMENDED BY THE CORONAVIRUS
 AID,  RELIEF,  AND  ECONOMIC SECURITY (CARES) ACT OF 2020, AND FILES FOR
 BANKRUPTCY PROTECTION UNDER SUCH ACT PRIOR TO MARCH TWENTY-SEVENTH,  TWO
 THOUSAND TWENTY-FOUR.
   (C)  "BANKRUPTCY  COURT"  MEANS THE UNITED STATES BANKRUPTCY COURT FOR
 THE NORTHERN, SOUTHERN, EASTERN OR WESTERN DISTRICT OF THE STATE.
   (D) "LEGAL SERVICES" MEANS INDIVIDUALIZED LEGAL ASSISTANCE IN A SINGLE
 CONSULTATION AND/OR ONGOING LEGAL REPRESENTATION, PROVIDED  BY  A  LEGAL
 SERVICES PROVIDER TO A COVERED BUSINESS, AND ALL LEGAL ADVICE, ADVOCACY,
 AND ASSISTANCE ASSOCIATED WITH SUCH SERVICE.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD02339-01-3
 S. 3033                             2

 
   (E)  "LEGAL  SERVICES  PROVIDER" MEANS AN INDIVIDUAL, ORGANIZATION, OR
 ASSOCIATION THAT HAS THE AUTHORITY TO  PROVIDE  LEGAL  SERVICES  AND  IS
 DESIGNATED BY THE ADMINISTRATOR TO PROVIDE SUCH SERVICES.
   2.  TEMPORARY ACCESS TO LEGAL SERVICES FOR SMALL BUSINESSES IN CERTAIN
 BANKRUPTCY PROCEEDINGS. ALL COVERED  BUSINESSES  SHALL  HAVE  ACCESS  TO
 LEGAL  SERVICES  AS PROVIDED IN THIS SUBDIVISION AND MADE AVAILABLE IN A
 FUND MAINTAINED BY THE ADMINISTRATOR PURSUANT  TO  SUBDIVISION  FOUR  OF
 THIS SECTION.
   (A)   COVERED   BUSINESSES  AFFECTED  BY  COVID-19  OR  PUBLIC  HEALTH
 RESTRICTIONS ENFORCED BY THE STATE DURING THE COVID-19  PANDEMIC,  WHICH
 FILE  FOR RELIEF UNDER THE FEDERAL SMALL BUSINESS REORGANIZATION ACT, AS
 AMENDED BY THE CORONAVIRUS AID, RELIEF, AND  ECONOMIC  SECURITY  (CARES)
 ACT, PRIOR TO MARCH TWENTY-SEVENTH, TWO THOUSAND TWENTY-FOUR, SHALL HAVE
 ACCESS  TO  LEGAL SERVICES IN CONNECTION WITH THE FILING AND PROSECUTION
 UNDER CHAPTER ELEVEN OF THE FEDERAL BANKRUPTCY CODE.
   (B) IN ALL CASES, ACCESS TO LEGAL SERVICES  ESTABLISHED  IN  PARAGRAPH
 (A) OF THIS SUBDIVISION SHALL TERMINATE:
   (I) UPON THE TERMINATION OR DISMISSAL OF THE BANKRUPTCY PROCEEDING;
   (II) AT THE RECOMMENDATION OF THE UNITED STATES TRUSTEE; OR
   (III)  AT  THE RECOMMENDATION OF THE ASSIGNED UNITED STATES BANKRUPTCY
 JUDGE.
   (C) IN ALL CASES, THE RIGHT TO COUNSEL ESTABLISHED IN PARAGRAPH (A) OF
 THIS SUBDIVISION SHALL NOT EXTEND TO APPEALS.
   3. POWERS AND  DUTIES  OF  THE  ADMINISTRATOR.  THE  ADMINISTRATOR  IS
 CHARGED WITH IMPLEMENTING THE REQUIREMENTS OF THIS SECTION NO LATER THAN
 OCTOBER FIRST, TWO THOUSAND TWENTY-THREE, AND MAY PROMULGATE SUCH RULES,
 POLICIES,  AND  PROCEDURES AS MAY BE NECESSARY AND APPROPRIATE TO ACCOM-
 PLISH SUCH IMPLEMENTATION. THE ADMINISTRATOR SHALL HAVE  THE  POWER  AND
 RESPONSIBILITY TO:
   (A)  ENSURE  INDEPENDENT,  COMPETENT,  AND  ZEALOUS  REPRESENTATION OF
 COVERED BUSINESSES RECEIVING LEGAL SERVICES PROVIDED  PURSUANT  TO  THIS
 SECTION;
   (B) EXAMINE, EVALUATE, AND MONITOR LEGAL SERVICES PROVIDED PURSUANT TO
 THIS SECTION;
   (C)  ESTABLISH MEASURES OF PERFORMANCE TO MONITOR THE QUALITY OF LEGAL
 SERVICES AND THE OVERALL EFFECTIVENESS OF SUCH LEGAL SERVICES;
   (D)  TARGET  GRANTS  IN  SUPPORT  OF  INNOVATIVE  AND   COST-EFFECTIVE
 SOLUTIONS THAT ENHANCE THE PROVISION OF LEGAL SERVICES; AND
   (E)  INVESTIGATE  AND  MONITOR  ANY  OTHER  MATTERS  RELEVANT  TO  THE
 PROVISION OF LEGAL SERVICES WHICH THE ADMINISTRATOR DEEMS IMPORTANT.
   4. FUNDING. (A) THE STATE SHALL ESTABLISH A DEDICATED FUND  AND  SHALL
 APPROPRIATE  SUFFICIENT  SUMS  INTO  SUCH  FUND  TO  FULLY CARRY OUT THE
 REQUIREMENTS OF THIS SECTION. FUNDS NECESSARY TO  FULLY  CARRY  OUT  THE
 REQUIREMENTS  OF  THIS SECTION SHALL BE DETERMINED BY THE ADMINISTRATOR,
 IN CONSULTATION WITH THE DIRECTOR OF THE DIVISION OF THE BUDGET.
   (B) THE ADMINISTRATOR SHALL BE CHARGED WITH ENSURING THAT APPROPRIATED
 FUNDS ARE  TIMELY  DISTRIBUTED  TO  LEGAL  SERVICES  PROVIDERS  FOR  THE
 PROVISION OF LEGAL SERVICES.
   § 3. This act shall take effect immediately.

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