New state program to assist small business owners, tenants

A new state grant program will provide up to $10,000 in relief to eligible small businesses struggling due to the COVID-19 outbreak.

“We are committed to helping small businesses across our state survive this unprecedented crisis, Governor Phil Murphy said. “A stronger and fairer New Jersey starts from the bottom up.

The Small Business Lease – Emergency Assistance Grant Program will infuse much needed funding into local economies by assisting both small businesses and the landlords that they rent from.”

For more information about your eligibility contact Josh Bauchner at jb@62q.f7d.myftpupload.com or 973-247-9000.

For more information from the state about the program,

https://www.nj.gov/governor/news/news/562020/approved/20200723a.shtml

The Stay Stays in Medical Marijuana RFA Case

Since December of last year the New Jersey Department of Health (DOH) has been barred from moving forward in the request for application process for medical marijuana facilities after being sued for unfairly excluding some applicants due to allegedly corrupt PDF files submitted as part of their applications.

The applicants contend the alleged corruption of the documents was caused by the DOH’s own submission portal and should not cause the disqualification of their applications.

The DOH sought to lift the stay but the Appellate Division recently denied the request, according to a recent story in NJCannabis Insider by Justin Zaremba.

“Hopefully, the DOH will now focus on settling the appeal by scoring all applications on merit so as to best serve the state’s growing medical marijuana patient population rather than engaging in wasteful and dilatory motion practice,” Joshua Bauchner, a partner in Ansell Grimm & Aaron P.C. who represents several of the entities suing the DOH told NJCannabis Insider.

Zaremba’s full story is reprinted here with permission.

Court Rejects DOH Request to Dissolve Stay

Decision on Stay of 2019 RFA for Medical Marijuana Facilities Could Come Within Weeks

The next step in the long delayed 2019 RFA process for medical marijuana facilities in New Jersey could come as early as the middle of this month.

In June the state Department of Health filed a motion to dissolve a stay preventing 2019 applications from moving forward, a move, not surprisingly, opposed by those who requested the stay.

As Ansell Grimm & Aaron partner Joshua Bauchner, (who represents several clients who requested the stay in an attempt to remedy what they contend is their unfair exclusion from having their requests considered) told Justin Zaremba of NJCannabis Insider, “If the court stays the course (pun intended) then we are still awaiting oral argument which they may expedite, but is otherwise set for the fall.”

Zaremba’s full story, is reprinted here with permission.

Court to Decide on Stay for 2019 RFA Case as Early as Mid-July

 

New Jersey’s DOH Continues Court Fight for Problem It Could Solve Administratively

Justin Zaremba of NJ Cannabis Insider has covered the latest developments in the ongoing dispute between the New Jersey Department of Health and litigants claiming to be unfairly excluded from the state’s Medical Marijuana facility licensing program due to a corrupt PDFs.

NJDOH sought to dissolve the stay preventing the 2019 RFA process from moving forward while those appealing what they view as an unfair process caused by a failure on the DOH’s part continue to fight to have their applications receive a fair review.

Zaremba’s full story is available here:

Get ready to hurry up and wait for the next turn of the screw on the 2019 RFA case.

 

AGA Partner Bob Honecker to Lead 200 Club

Ansell Grimm & Aaron PC Partner Robert A Honecker Jr. has been named as the new President of the 200 Club of Monmouth County. Honecker succeeds former Lt. Gov. Kim Guadano as the leader of the organization which is dedicated to providing financial assistance to the families of public safety and rescue personnel in the county who are injured or die in the line of duty.

A full story on the Club’s reorganization meeting is available here:

Honecker named President of 200 Club

You can visit the organization on the web here:

Monmouth 200 Club

 

Client Alert: The Enforceability of Waivers From Automatic Bankruptcy Stays

In light of the COVID-19 pandemic, the risk of commercial tenants filing for bankruptcy protection has risen substantially.  A concern for many commercial landlords is whether avenues exist for protecting their ability to initiate an action against tenants when they default on their lease obligations and file for bankruptcy protection.

Below is a syllabus of the lightly-developed case law addressing whether waivers from automatic bankruptcy stays are enforceable, and the means by which landlords and their tenants can enter into such agreements.  It is important to note, however, that the courts have not ruled on many cases during the pandemic and applicable case law may be in flux.

 

Enforceability of Bankruptcy Stay Waivers Contained in Forbearance Agreements

Pursuant to an Executive Order issued by New York Governor Cuomo, a statewide eviction moratorium on residential and commercial evictions has been extended to August 20, 2020, for tenants who qualify for unemployment benefits or who are experiencing a “financial hardship” as a result of COVID-19.  Landlords may serve rent demands, but cannot commence litigation against tenants, such as eviction actions.  Similarly, New Jersey Governor Murphy issued an Executive Order setting a moratorium on residential evictions and foreclosures in New Jersey — though the New Jersey Executive Order contains language clarifying that commercial tenants are not subject to the moratorium.  The New Jersey moratorium will last until two months after Governor Murphy declares an end to the COVID-19 health crisis, unless the Governor issues another Executive Order to end the moratorium sooner.

In light of the present circumstances, it may be advisable for commercial landlords to work with their tenants to enter into forbearance agreements (as opposed to lease amendments) containing a waiver from the automatic bankruptcy stay.  The agreements should make clear that the tenant is in default, that the agreement is being entered into as a result of the default, and that the landlord is deferring/forgiving rent, and forbearing from eviction (or whatever the consideration may be) in exchange for a waiver of the automatic stay.

While the case can be made that pre-bankruptcy agreements with tenants via a lease amendment may be enforceable, the more secure means to accomplish this is in the form of a forbearance agreement.  In In re Velez, the court rejected landlord’s attempt to enforce a general waiver to escape the automatic stay, distinguishing general waiver language in a lease amendment from a forbearance agreement “whereby the debtor specifically waived future protections of the automatic stay.”  In re Valez, 601 B.R. 351, 364 (Bankr. M.D. Pa. 2019).

In In re Frye, 320 B.R. 786 (Bankr. D. Vt. 2005), the court set forth certain factors to be utilized in deciding whether relief from the stay should be granted.  The court also noted that it considered additional factors in making the determination that a waiver is enforceable, including:  (1) the sophistication of the parties; (2) the presence of counsel; (3) consideration for the waiver; (4) the length of waiver period; (5) the risks and concessions assumed by lender/landlord; (6) the effect on other stakeholders in the Bankruptcy; (7) any defenses to the waiver, such as mistake or fraud; (8) the impact of the waiver on the feasibility of Debtors’ plan; (9) whether enforcement of the waiver would promote public policy of out of court settlements; (10) prejudice to landlord/lender for non-enforcement; (11) the time gap and change in circumstances between date of waiver and bankruptcy filing; and (12) whether the landlord/lender would otherwise be entitled to relief from the automatic stay. 

 

Conclusion

As many courts are closed and this is new territory, we expect the case law may evolve as litigations progress on this novel issue.  Arguments for the enforcement of waivers from automatic bankruptcy stays may be successful, depending on new rulings as they are issued and the specific language in the forbearance agreement executed by landlords and tenants.  Landlords and tenants alike are advised to consult with an attorney experienced in this area to determine viability of such plans and to protect their interests.

Bauchner Speaks With NJBiz About State’s failure on Medical Marijuana Facility Licensing

Ansell Grimm & Aaron PC partner Josh Bauchner recently spoke to NJBiz about the ongoing battle with New Jersey to address what multiple applicants for medical marijuana facility licenses say is a technical failure on the state’s part that lead to the unjust denial of their applications.

Bauchner, who represents a number of the denied applicants told NJBiz, “The DOH is arbitrarily eliminating candidates on [the file] corruption issue. Those may very well be the best candidates, so why should they be deleted? The most fair and equitable way to resolve the whole problem [is] to allow the appellants to file any documents that were corrupt with certification that they weren’t changed and to score everyone’s application on merit.”

For the full story, visit the NJBIZ website here:

Cannabis Conundrum

 

Radburn Regulations bring new rules for Board Meetings & Minutes

In 2017, New Jersey’s legislature amended New Jersey’s Planned Real Estate Development Full Disclosure Act, commonly known as PREDFDA. These amendments have been labeled the “Radburn Amendments”. PREDFDA has always been administered by parts of New Jersey’s Department of Community Affairs (“DCA”). To that end, DCA has adopted regulations it claims are necessary to “implement” and/or “enable” relevant owners to “more easily and fully comply with” the Radburn Amendments. These regulations will likely be known as the “Radburn Regulations”.

The Radburn Regulations attempt to ensure that, no matter what, every “binding” decision of a board is first and only made at a board meeting open to attendance. These regulations define “binding vote” as a vote “made with a quorum of the executive board members present”. A board vote occurring at a “closed meeting” or via another forum has been expressly declared to be NOT binding. Now, owners can only be excluded for a “discussion” concerning a limited group of matters including those matters involving an unwarranted invasion of privacy and matters involving communications that should be confidential in light of the association’s attorney-client privilege. Any actual binding decisions concerning any of those matters must be first and only made at a board meeting open to attendance of owners. For every board vote, the board must provide to those in attendance a “brief explanation” of the basis for and “cost entailed” in the vote. There are a variety of strategies and arguments available to an association that hopes to minimize the burdens that the Radburn Regulations will place on associations in this regard.

The association must produce minutes concerning every board meeting open to attendance of owners. These minutes must be “legible”, noting the board members that participated. The minutes must clearly identify any “matters addressed”, any matters voted on, along with the basis for “and cost entailed in the matter which” was the “subject of the vote”. The minutes must be available to owners before the next board meeting, even if those minutes have to be identified as “draft”. Lastly, if a board elects to record its meeting, the recording must be available to owners.

New Rules for Notification of Board Meetings Under Radburn

In 2017, New Jersey’s legislature amended New Jersey’s Planned Real Estate Development Full Disclosure Act, commonly known as PREDFDA. These amendments have been labeled the “Radburn Amendments”. PREDFDA has always been administered by parts of New Jersey’s Department of Community Affairs (“DCA”). To that end, DCA has adopted regulations it claims are necessary to “implement” and/or “enable” relevant owners to “more easily and fully comply with” the Radburn Amendments. These regulations will likely be known as the “Radburn Regulations”.

The Radburn Regulations expressly address how “notice” of “board meetings” must be done. After the “annual meeting” – which the Radburn Regulations now make mandatory – the association has 7 days to “post, and maintain posted throughout the year, an open meeting schedule of the” board meetings. This annual schedule must identify the “time, date, and locations of each” meeting and be posted in at least 1 location identified by the Radburn Regulations. Any changes to the annual schedule of board meetings “shall be made at least 7 days prior to the scheduled date and posted and maintained” like the original schedule. Even if the association posts this “schedule” it still must give “all members” direct notice of every board meeting at least 7 days prior. This individual notice must also be posted publicly and on any “website and included in any newsletter”. Additionally, the association must provide each notice “personally” to every owner “by mail, hand-delivery, or electronic means”. Lastly, this “notice” must include certain details concerning the board meeting’s time, etc. and agenda details that note particular discussion, action, and reoccurring items. The association must even post a notice of “cancellation at the meeting site”, at a location within the association and on the website if a meeting noted on the overall annual meeting has been canceled.

The Radburn Regulations do allow a board meeting to deal with “matters of such urgency and importance that delay for the purpose of providing 7 days advance notice would” likely result in “substantial harm” if that board “meeting is limited to discussion of, and acting with respect to” the urgent and important matter. In that case, notice must be “provided as soon as possible following the calling of the meeting”. That notice must also be posted publicly, posted on any association “website” (and included in any newsletter), and provided “personally” to every owner “by mail, hand-delivery, or electronic means”. The board must make certain records vis-a-vis this meeting and respect other controls.

Important Information About the New Radburn Regulations & Elections For Associations Consisting of Less than 50 Units

In 2017, New Jersey’s legislature amended New Jersey’s Planned Real Estate Development Full Disclosure Act, commonly known as PREDFDA. These amendments have been labeled the “Radburn Amendments”. PREDFDA has always been administered by parts of New Jersey’s Department of Community Affairs (“DCA”). To that end, DCA has adopted regulations it claims are necessary to “implement” and/or “enable” relevant owners to “more easily and fully comply with” the Radburn Amendments. These regulations will likely be known as the “Radburn Regulations”.

The Radburn Regulations expressly address “board elections” of associations with fewer than 50 units. The Radburn Regulations govern the use of proxies and absentee ballots by these small associations. If the association utilizes proxies, it must contain certain disclosures. An owner can revoke such a proxy prior to the casting of a vote. If the association utilizes proxies, it “must also make absentee ballots available”. Associations consisting of less than 50 units may permit electronic voting so long as the association can “verify the eligibility of the voters” and “count the ballots in a non-fraudulent and verifiable way”. DCA considers the following to be the “non-fraudulent and verifiable way” to count ballots:

  1. any physical location for ballots must be “secured”;
  2. ballot “tallying” must “occur publicly, with the ballots “open to inspection” for not less than 90 days from the election’s date;
  3. ballots must be “cast in an anonymous manner”; and,
  4. if the bylaws allow, and the particular member agrees, a ballot can be cast “electronically if “it is administered by a neutral 3rd party and anonymity is maintained”.

Because of the Radburn Regulations, associations of less than 50 units must provide a notice of election that includes certain information and be provided within a tight 15-day window. Every owner in “good standing” can nominate himself or another owner in “good standing” to be a candidate for election and “good standing” is the only “criterion” that can be employed concerning a nominee’s eligibility. Owners of these associations must have the chance to review each candidate’s “qualifications”. An association of less than 50 units is not required to allow for “write-in candidates”. Lastly, any owner that the association considers to be not in “good standing” must be notified of that within a specific time frame prior to the election.