What Does The New Chapter 11 Subchapter V Mean For Your SBA Loan?
Struggling small business or personal guarantors of an SBA loan can take advantage of the new Chapter 11 Subchapter V bankruptcy procedures.
The Biden administration has made it clear that it will take action against scammers who have stolen billions in COVID relief funds. The administration directed federal agencies to step up their efforts to investigate and prosecute fraud.
Book a Consultation CallThe Biden administration has made it clear that it will take action against scammers who have stolen billions in COVID relief funds. The administration has directed federal agencies to step up their efforts to investigate and prosecute fraud related to pandemic relief programs.
The relief programs were established to provide financial support to individuals and businesses impacted by the COVID-19 pandemic. Unfortunately, scammers have taken advantage of these programs and have stolen billions of dollars.
The Biden administration has taken several steps to combat this fraud. It has created a COVID-19 Fraud Enforcement Task Force to coordinate investigations and prosecutions across multiple agencies. The task force is also working to increase public awareness of COVID-19 fraud and how to report it.
In addition, the administration has directed federal agencies to take a more proactive approach to preventing fraud. This includes improving fraud detection systems and sharing data across agencies to identify fraudulent activity.
The Biden administration has also made it clear that it will hold those who engage in COVID-19 fraud accountable. The Department of Justice has already brought several cases against individuals and companies that have defrauded the relief programs.
There have been various estimates of the amount of fraud that has occurred in COVID-19 relief programs. According to a report from the Government Accountability Office (GAO) released in November 2020, the federal government had distributed more than $2.6 trillion in pandemic relief funds as of September 2020, and the GAO estimated that improper payments, including fraud, could range from $2 billion to $4 billion.
However, more recent estimates suggest that the amount of fraud could be higher. According to a report from the Office of the Special Inspector General for Pandemic Recovery (SIGPR) released in January 2021, there were "significant levels of fraud" in the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program, with estimated losses of $4.6 billion to $5.4 billion. More recent estimates put the number at $60 billion.
In February 2021, the Department of Justice announced that it had charged more than 150 individuals with COVID-19 related fraud, including schemes related to PPP and EIDL. The DOJ also announced that it had recovered more than $580 million in COVID-19 related fraud cases.
So while it's difficult to estimate the exact amount of fraud that has occurred in COVID-19 relief programs, it's clear that it has been a significant problem.
If you have a EIDL loan issue of more that $30,000, contact our law firm to reserve a consultation time.
Millions of Dollars in SBA Debts Resolved via Offer in Compromise and Negotiated Repayment Agreements without our Clients filing for Bankruptcy or Facing Home Foreclosure
Millions of Dollars in Treasury Debts Defended Against via AWG Hearings, Treasury Offset Program Resolution, Cross-servicing Disputes, Private Collection Agency Representation, Compromise Offers and Negotiated Repayment Agreements
Our Attorneys are Authorized by the Agency Practice Act to Represent Federal Debtors Nationwide before the SBA, The SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service.
Client personally guaranteed an SBA 7(a) loan to help with a relative’s new business venture. After the business failed, Treasury was able to secure a recurring Treasury Offset Program (TOP) levy against his monthly Social Security Benefits based on the claim that he owed over $1.2 million dollars. We initially submitted a Cross-Servicing Dispute, but then, prepared and filed an Appeals Petition with the SBA Office of Hearings and Appeals (SBA OHA). As a result of our efforts, we were able to convince the SBA to not only terminate the claimed debt of $1.2 million dollars against our client (without him having to file bankruptcy) but also refund the past recurring amounts that were offset from his Social Security Benefits in connection with the TOP levy.
Clients obtained an SBA 7(a) loan for $324,000 to buy a small business and its facility. The business and real estate had an appraisal value of $318,000 at the time of purchase. The business ultimately failed but the participating lender abandoned the business equipment and real estate collateral even though it had valid security liens. As a result, the lender recouped nearly nothing from the pledged collateral, leaving the business owners liable for the deficiency balance. The SBA paid the lender the 7(a) guaranty money and was assigned ownership of the debt, including the right to collect. However, the clients never received the SBA Official 60-Day Notice and were denied the opportunity to negotiate an Offer in Compromise (OIC) or a Workout directly with the SBA before being transferred to Treasury's Bureau of Fiscal Service, which added an additional $80,000 in collection fees. Treasury garnished and offset the clients' wages, federal salary and social security benefits. When the clients tried to negotiate with Treasury by themselves, they were offered an unaffordable repayment plan which would have caused severe financial hardship. Clients subsequently hired the Firm to litigate an Appeals Petition before the SBA Office & Hearings Appeals (OHA) challenging the legal enforceability and amount of the debt. The Firm successfully negotiated a term OIC that was approved by the SBA Office of General Counsel, saving the clients approximately $205,000.
Clients borrowed and personally guaranteed an SBA 7(a) loan. Clients defaulted on the SBA loan and were sued in federal district court for breach of contract. The SBA lender demanded the Client pledge several personal real estate properties as collateral to reinstate and secure the defaulted SBA loan. We were subsequently hired to intervene and aggressively defend the lawsuit. After several months of litigation, our attorneys negotiated a reinstatement of the SBA loan and a structured workout that did not involve any liens against the Client's personal real estate holdings.
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