COVID-19 Relief Package Includes Amendments to Section 366 of the Bankruptcy Code

By Keila Estevez
Associate, Bernstein-Burkley, P.C.

Keri Ebeck, Esq.
Partner at Bernstein-Burkley, P.C.

On December 27, 2020, President Trump signed a new $900 billion COVID-19 Relief Package. The bill provides for certain bankruptcy protections. Pursuant to Division FF, Title X-Bankruptcy Relief, section 366 of title 11 of the United States Code, 11 U.S.C. §§ 101 et seq. (the “Bankruptcy Code”), was amended to add the following provisions:

(d) Notwithstanding any other provision of this section, a utility may not alter, refuse, or discontinue service to a debtor who does not furnish adequate assurance of payment under this section if the debtor-

  • is an individual;
  • makes a payment to the utility for any debt owed to the utility service provided during the 20-day period beginning on the date of the order for relief; and
  • after the date on which the 20-day period beginning on the date of the order for relief ends, makes a payment to the utility for services provided during the pendency of case when such a payment becomes due.

The added subsection (d) to section 366 prohibits utility companies from terminating services for individual debtors for failure to provide adequate assurance as long as the individual debtor becomes and remains current for post-petition services during the 20-day period after the commencement of the bankruptcy case. After the 20-day period from the commencement of the bankruptcy case has ended, utility companies are still prohibited from discontinuing services so long as the individual debtor remains current for post-petition services.

The amended section 366 shall remain in effect for one year from the enactment of the Bill. Accordingly, the added subsection d provision shall be stricken on December 27, 2021 unless extended by enactment of a subsequent act.

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Written by Bernstein- Burkley, P.C. on January 6, 2021

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