While criminal proceedings are not stayed by the bankruptcy automatic stay, when a creditor files criminal charges simply in an attempt to collect a debt, they may face the wrath of the bankruptcy judge.  This was the case in In re Kimbler, 2020 Bankr. LEXIS 1853, Case no 19-04165-5-DMW (Bankr. E.D. N.C. 15 July 2020).  The debt involved a consignment shop, Cherishables Antiques, that rented booths for selling antiques and collectibles.  The creditor: Dority, rented a booth at the shop for $125/mo plus 10% commission on items sold for less than $100 and 15% on items sold for more.  Cherisables closed in May or June 2019, after notifying vendors to remove inventory and follow a procedure for reconciling inventory and sales.   Dority did not follow this procedure.  Per Cherishables, Dority owed them $150,  Dority asserted Cherishables owed him $3,989.25.  Dority filed a small claims complaint on 16 August 2019 alleging a $1,400 debt asserting Cherishable sold items without giving him funds.  On 11 September 2019 Debtor filed a pro se chapter 7 bankruptcy listing the $3,989.25 debt alleged by Dority to be owed.  At trial on 12 September in the small claims action the magistrate adjourned the trial as being stayed by the bankruptcy.  Mr. Dority then became angry due to the adjournment and claims he was advices by the court and others to seek criminal embezzlement charges against the debtor.  He then went to the local police department to file a criminal complaint.  On 24 October the state court issued warrants for the arrest of debtor  for felony embezzlement and set bail for $4,500.  The debtor could not post this, and was incarcerated for 17 days before being released while required to wear an ankle bracelet, for which she was charged $883.50.  Debtor was 61 years old when incarcerated, which made it more difficult to adapt to incarceration; and when released was unable to continue her employment with an advertising agency from which she was earning about $1,000/month.  The experience caused  severe emotional distress for her and her 19 year old son.  The debtor received a discharge on 31 December 2019.  On 3 January 2020 Debtor's new counsel sent a stay violation letter to Dority and the district attorney asserting violation of the automatic stay, directing Dority to cease efforts to collect the prepetition debt and that sanctions may be filed.  Dority took no action in response to the demand letter, and the criminal charges remained pending as of the issuance of the bankruptcy court's order.   The debtor reopened the bankruptcy and filed for actual and punitive damages against Dority.  The bankruptcy code provides that the bankruptcy filing operates as a stay ofthe commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title. 11 U.S.C. 362(a)(1)..   In order to obtain sanctions, a party must show 1) that a violation occurred, 2) that the violation was willful, and 3) that the violation caused actual damages.1   11 U.S.C. §362(b)(1) provides an exception to the automatic stay for the commencement or continuation of a criminal proceeding against the debtor.  However, this exception does not apply if the primary purpose is to recover a dischargeable debt.2   The court concluded that bankruptcy proceedings offer ample protections who are owed monies due to larceny, fraud or other willful injury inflicted by debtor.  Rather than evaluate his rights in the bankruptcy case, Dority decided to pursue debt recovery through criminal proceedings.  Whether or not anyone in the state court recommended such course, such actions violated the automatic stay.  Further, such actions were willful.  Dority received actual knowledge of the bankruptcy and the automatic stay at the small claims trial.  His actions caused a willful and malicious injury to the Debtor that harkens back to the days of debtor's prisons in victorian England.  The sole cause of Debtor's undeserving hardship are the borderline unlawful and malicious actions of Dority, who had no contrition, regret, or remorse for his actions.  Debtor thereby suffered sustained actual damages by being unable to work and the cost of the ankle monitor, attorneys fees, and extensive, deep, harmful and significant emotional distress.  The actions in failing to attempt to terminate the criminal charges upon receipt of the discharge and demand letter violate the discharge injunction of 11 U.S.C. 524(a)(2).  The bankruptcy court granted the request for sanctions, and awarded a total of $40,979.50 damages consisting of $5,000 actual damages for lost income for five months, $883.00 for the ankle monitor, $7,096.50 for fees for Debtor's counsel, $1,000/day punitive damages for each of the 16 days Debtor was incarcerated, and $100/day punitive damages for each of the approximately 120 days Debtor wore an ankle monitor.  Note that as the court noted the actions of Dority were willful and malicious, a future bankruptcy by him would not discharge the obligation.  There is a question whether the judgment would hold up under Taggart v. Lorenzen, 139 S.Ct. 1795, 1799 (June 3, 2019) which standards, per the 9th Cir. BAP in Suh v. Anderson (In re Jeong), 9th Cir. B.A.P., March 16, 2020), also apply to stay violations.  1 In re Ennis, No. 14-02188-5-SWH, 2015 Bankr. LEXIS 3657, 2015 WL 6555392 at *5 (Bankr. E.D.N.C. Oct. 28, 2015).↩2 In re Byrd, 256 B.R. 246, (Bankr. E.D.N.C. 2000).↩Michael Barnett, Esq.Law offices of Larry Heinkel, PA506 N Armenia Ave.Tampa, FL 33609-1703813 879-3100https://myfloridabankruptcylawyer.com

A reader of our blog asked a very good question regarding guarantees/guaranties and our post regarding the use of bankruptcy to terminate or end commercial leases in Manhattan, New York. The question posed was how does one terminate or end a lease in Manhattan if the lease is guaranteed by a principal of the tenant?Our response is below.Our blog can be found at http://shenwick.blogspot.com/ and the post titled "Commercial leases in New York City, COVID-19, Recent Protests and a Strategy to End or Terminate Commercial Leases", dated SUNDAY, JULY 12, 2020 can be found at https://shenwick.blogspot.com/2020/07/commercial-leases-in-new-york-city.html.First, if a commercial lease has a guarantee/guaranty, terminating the lease without addressing the underlined guarantee, is of no value to the commercial tenant.Second, there are two types of guarantees/guarantys with respect to commercial leases, there is a general guarantee (“Guarantee” ) which generally requires that the principal of the tenant guarantee the payment of base rent, additional rent and the performance of any requirements under the lease by the tenant.Third, the second type of guarantee/guaranty is known as a Good Guy Guarantee (“GGG”), which requires the principal of the tenant to pay rent or additional rent until the tenant vacates the space, returns the keys to the landlord and leaves the space in a broom clean condition. Many GGG have a term limit, in which the good guy guarantee expires after a certain number of years, such as 2 to 3 years if there is no default under the lease.Fourth, after being retained to terminate a commercial lease with a guarantee, we request a copy of the guarantee and review its terms to determine if it is a guarantee, a GGG or a guarantee that has terminated for some reason such as time. Fifth, we then ask for financial statements from the guarantor, including a balance sheet and income statement.Sixth, we then engage in asset protection planning for the guarantor to make it more difficult for the landlord to obtain possession of the guarantor's assets if there is a default under the lease or no settlement with the landlord.Seventh, we then begin negotiations with the landlord, providing the landlord with the pro forma bankruptcy petition for the tenant and financial information regarding the guarantor. Often times we will also prepare a pro-forma bankruptcy petition for the guarantor, although a bankruptcy filing by the guarantor is always a last resort.Eighth, we aim to convince the landlord that by doing a workout and releasing the tenant and the guarantor, the landlord will regain possession of its premises sooner, the landlord will save on landlord tenant and bankruptcy legal fees. The exercise is similar to that which we do when there is no guarantor, but with a guarantor there is another degree of difficulty or complexity, which is not insurmountable. Additionally, based on the time value of money, a dollar paid to the landlord today has greater value than the landlord being paid over three years and a bankruptcy filing by the guarantor. Ninth, if we are unable to do a work out with the landlord, then the tenant can file a Chapter 7 bankruptcy and the guarantor can file either a chapter 7 bankruptcy ( liquidation) or Chapter 13 bankruptcy where the landlord will be paid back over three to five years or a Subchapter V Chapter 11 bankruptcy for the guarantor (the landlord would be paid over 3 years). While we cannot guarantee success, we have used these strategies successfully in Manhattan and for the right tenant and guarantor, they are a very effective way to terminate or end a commercial lease. Jim Shenwick 212 541 6224 [email protected]

IRS Means Never Having to Say….Anything The IRS is not like most creditors. (Your probably knew that.)  The IRS in bankruptcy is not like most creditors in bankruptcy, either. Knowing what debts have been cleared (discharged) by your bankruptcy is easy for most debts. For credit cards, loans (including payday loans, who want you to […] The post IRS Means Never Having to Say…. by Robert Weed appeared first on Northern VA Bankruptcy Lawyer Robert Weed.

This story Cancel Student Loans In Bankruptcy? You May Not Qualify  Forbes July 16, 2020 originally appearedhttps://www.forbes.com/sites/zackfriedman/2020/07/16/student-loans-bankruptcy/#227c03822cb4-------Cancel Student Loans In Bankruptcy? You May Not QualifyZack FriedmanCan you discharge your student loans in bankruptcy? A new proposal says yes, but not everyone qualifies.Here’s what you need to know.Student LoansRep. Mary Gay Scanlon (D -PA) introduced new legislation today that would make it easier for you to discharge student loans in bankruptcy if you are struggling financially and have been impacted by Covid-19. Here’s the good news: the COVID-19 Student 5 Loan Relief Act of 2020 would apply to both private student loans and federal student loans, and be available to all Americans impacted by Covid-19.Discharge student loans: the fine printNow, here’s the fine print: you may not qualify to discharge your student loans in bankruptcy under this proposal. According to the bill, to qualify:your income has been reduced due to the Covid-19 pandemic; orthe primary income earner in your family died; oryou have become permanently disabledMost Popular In: Personal FinanceSecond Stimulus Check Income Limit Will Likely Be Higher Than $40,000New Stimulus Package May Be Introduced Next WeekProposal: Discharge Student Loans For Those Harmed By Pandemic And RecessionNow, lets’ break down the first requirement based on the language on the bill. The legislation requires a reduction in income due to Covid-19. What does this mean? Here’s what the bill says. It’s not enough that your income simply declined. Specifically, to qualify to discharge your student loans in bankruptcyIf you make less than this pre-tax income...your income must decline by at least this percentage...< $75,000 Income: at least 20% decline$75,000 - $125,000 Income: at least 30% decline$125,000+ Income: at least 40% declinePlus, the relevant time period is “beginning January 21, 2020 and extending until 60 days after the duration of the Covid-19 emergency or the duration of the Covid-19 outbreak or as a result of the COVID-19 outbreak.” Even if you wouldn’t qualify under this specific proposal, you still may be able to discharge your student loans in bankruptcy through the normal course based on your financial situation. Traditionally, unlike mortgages or credit card debt, student loans cannot be discharged in bankruptcy. There are exceptions, however, namely if certain conditions regarding financial hardship are met.Cancel student loan debtThis latest bankruptcy legislation is part of an ongoing effort to provide more student loan relief, particularly as as result of Covid-19. For example, Student Debt Crisis, a leading student loan advocacy not-profit, recently sent Sen. Elizabeth Warren (D-MA) a petition for student loan forgiveness with 1.2 million signatures. Warren, who proposed student loan forgiveness for 95% of Americans, has been a proponent of student loan forgiveness and student loan debt cancellation. Scanlon’s legislation would make it easier by amending Chapter 11 of the U.S. Bankruptcy Code, although the requirements to qualify may be challenging for some. Student loan forgiveness has been a hot topic in Congress, particularly in the wake of the Covid-19 pandemic. For example, former Vice President Joe Biden reiterated his support for student loan forgiveness and his support to discharge student loans in bankruptcy. Other members of Congress have proposed legislation to forgive student loans, although none have become law.Will student loans be included in the new stimulus?Maybe. It’s unlikely that this bill or a similar bill to discharge student loans in bankruptcy will be included in the new stimulus. The new stimulus package may be introduced next week. Currently, the focus includes second stimulus checks, state and local aid, unemployment benefits or a return-to-work bonus and liability protection due to Covid-19 for businesses. However, don’t expect student loan forgiveness to be included. However, Congress may extend student loan relief under the Cares Act, or Congress could allow the student loan relief to expire as planned on September 30, 2020. That said, student loans have not been the focus among Republicans (who control the Senate) among other high priority issues. There is bipartisan support to make student loans dischargeable in bankruptcy, but there may not be consensus to act until after the election in the next Congress.

This post appeared in the New York Times on 7/17/20 https://www.nytimes.com/2020/07/17/business/dealbook/bankruptcy-filings-pandemic.html--------The Eye of the Bankruptcy StormChesapeake Energy was among the companies to file for bankruptcy protection in recent weeks.Credit...Brett Carlsen/ReutersJuly 17, 2020Updated 7:28 a.m. ET Want this delivered to your inbox each day? Sign up here.The pendulum swings back toward fearAs the pandemic persists, more and more companies have filed for bankruptcy protection, following in the footsteps of Hertz, J. Crew and Neiman Marcus. But financial restructuring advisers — the bankers and lawyers who help troubled companies repair their balance sheets or slog through Chapter 11 — say that they expect filings to accelerate. If anything, we’re now in the lull before the storm.About 3,600 companies filed for Chapter 11 in the first half of 2020, more than any year since 2012, according to the American Bankruptcy Institute. The past few weeks have brought filings by the fracking pioneer Chesapeake Energy, the Japanese home goods company Muji USA and the retailer New York & Company.ImageBut cases dropped last month. Why? Advisers cited the federal government’s programs for stabilizing the economy and credit markets, as well as efforts by companies to bolster their cash by drawing down their credit lines and issuing new bonds. (Businesses worldwide have sold $2.1 trillion worth of bonds so far this year, up 50 percent from the year before.) Earlier-than-expected reopenings have bolstered some businesses’ performance, allowing them to bring in some sales — critical to servicing their debts.Yet as coronavirus cases surge again, an uptick in filings may follow. The rise in infections brings the prospect of renewed lockdowns and shakes consumer confidence, testing companies’ abilities to survive another spell of little to no revenue. “We’re starting to see the pendulum swing back toward fear again,” William Hardie, a managing director in Houlihan Lokey’s financial restructuring group, told DealBook’s Michael de la Merced.And what comes next could be ugly. Many companies that saved themselves by borrowing more money are now in a bind: They have mortgaged nearly all their available assets, leaving little wiggle room.• Creditors are willing to give companies concessions on existing debt covenants — especially since they don’t want to recognize any of their loans as impaired, hurting their own balance sheets — but if borrowers need more money, they may find lenders are unwilling or unable to front the cash.Where to expect the next wave: While retailers and energy companies have dominated the first wave, restructuring experts say the next round of filings could hit the travel industry hard, including airlines, hotels and firms that lease planes to carriers.More companies will be taken over by lenders, who will convert their loans into equity. So far, advisers say, talks between debtors and creditors have been sanguine, with relatively few of the disagreements that often complicate Chapter 11 cases. “There’s no finger-pointing,” Mr. Hardie said. “Everyone realizes this is no one’s fault.”ImageThe C.D.C. has extended a ban on cruise ships until Sept. 30.Credit...Alexandre Meneghini/Reuters

Facing dire financial straits due to the Covid-19 pandemic, but think you can’t file bankruptcy because you’ve been in bankruptcy court before? We’ve got good news: you may be eligible to file again. It depends on when your last bankruptcy case was, and when you filed. If you filed Chapter 7… You can file for […] The post How Often Can You File Bankruptcy in Montgomery County, PA? appeared first on .

Facing dire financial straits due to the Covid-19 pandemic, but think you can’t file bankruptcy because you’ve been in bankruptcy court before? We’ve got good news: you may be eligible to file again. It depends on when your last bankruptcy case was, and when you filed. If you filed Chapter 7… You can file for […] The post How Often Can You File Bankruptcy in Montgomery County, PA? appeared first on .

  In Bentley v. OneMain Fin. Grp. LLC, 2020 Bankr. LEXIS 1837, Case No 19-8026 (6th Cir. B.A.P., 8 July 2020) the BAP affirmed a bankruptcy court decision that had held OneMain Financial had not violated the discharge injunction.  The case involved a surrendered 2001 Dodge Dakota in a chapter 7 case filed in 2018.  The schedules showed an $8,000 lien on the vehicle which was valued at $150, and stated an intent to surrender the vehicle to the creditor.  Discharge was entered June 11, 2018 with no further action taken on the vehicle.   Debtor called the creditor after the discharge asking them to take the lien off the vehicle, noting that the vehicle was totaled.   The creditor suggested taking the vehicle to a scrap yard, at which point it would 'consider accepting that to release the lien.'  Several weeks later Debtor's father in law, who owned the property where the vehicle was stored, called the creditor along with the debtor and was told that the creditor would not repossess the vehicle because the value was too low, and indicated that they would have to make an offer to have the lien released, which would then have to be approved by the creditor's management.  The father in law offered to have the vehicle towed to the highway or one of creditor's locations, but OneMain's representative indicated that debtor would then be charged any fees associated with abandoning the vehicle.  OneMain again suggested getting an estimate for the value of the vehicle on a mechanic's letterhead saying what's wrong with the vehicle and what it would cost to repair, along with an offer to purchase the vehicle, and OneMain would consider whether to accept the offer. In November 2018 Debtor moved to reopen his case and pursue OneMain for an alleged violation of the discharge injunction.  Once the case was reopened, Debtor sought sanctions under 11 U.S.C. 524(a)(2) for collecting or attempting to collect a discharged debt by refusing to release it's lien on the vehicle until payment of the discharged debt.  10 days after the filing of the motion, OneMain released the lien.  The bankruptcy court ruled in favor of OneMain on summary judgment, citing Pratt v. GMAC (In re Pratt)1 for the proposition that the debtor must show that the creditor acted in such a way as to 'coerce' or 'harass' the debtor improperly.  Determining that unlike the creditor in Pratt, which requested payment in full of its claim to release the lien, the debtor here only requested a minimal consideration, and that the creditor here gave several options to obtain release of its in rem rights. The Bankruptcy Appellate Panel noted that while §524(a)(2) releases a debtor's personal liability on a debt, it does not affect a creditor's in rem rights in the collateral.  The panel agreed with the Pratt case that when a debtor indicates collateral is to be surrendered, the court must examine whether the creditor acted in a way to 'coerce' or 'harass' the debtor improperly.  The court went into an in depth analysis of Pratt, noting it stated five facts 'material' to the assessment of objective coercion.  1) the debtor's timely filed their notice of intent to surrender; 2) the debtor's made the vehicle available to the creditor to repossess; 3) the value and condition of the vehicle made it necessary to tow to a salvage dealer who would not accept it without a lien release; 4) the creditor determined it was not cost effective to repossess the vehicle; and 5) state law would not allow the vehicle to be junked without the release of the creditor's lien. The BAP found that the case before it had facts significantly different from Pratt, including that the vehicle had some value, and the creditor did not insist on payment in full of its debt to release the lien.  It also determined that even finding all five factual conditions to be met did not require an assessment of objective coercion, as the ruling in Pratt was primarily based on the creditor's insistence on being paid in full.  Nor did the panel find that conversations between the debtor and creditor for release of the lien are prohibited.  Such conversations are only prohibited where they are designed to 'collect, recover or offset the debt as a personal liability of the debtor.  Nor did the court find the procedures required by OneMain to be unduly burdensome, as the creditor never required Debtor to do anything other than direct the party wishing to take possession of the vehicle to contact the creditor.  The court noted a debtor's surrender of collateral does not divest a debtor of ownership and its obligations, nor require a creditor to take possession of it.  The case does not apply a bright line for debtors of what they need to do when they wish to surrender collateral a creditor does not want, and that a creditor refuses to release the lien on.  Perhaps the better solution for a debtor in this position would be to file a motion to redeem the collateral under 11 U.S.C. 722, and force release of the title in that manner for a recalcitrant creditor.Michael BarnettLaw Offices of Larry Heinkel, PA506 N Armenia Ave.Tampa, FL 33609-1703tel: 813 870-3100https://myfloridabankruptcylawyer.com1 462 F.3d 14, 19 (1st Cir. 2006).↩

The Second Circuit has sided with a blogger who was sued for defamation for his headline "TCPA Class Certification Denial Exposes Major Spousal Scheme."  Wexler v. Dorsey & Whitney, LLP, 2020 U.S. App. LEXIS 21474 (2nd Cir. 7/9/20). While the case does not fall within the usual fare for this blog, I am always happy to write about another blogger.The underlying case which led to the blog post was a putative class action in which the  husband-attorney proposed that his wife serve as class representative. Even though the husband agreed to withdraw from the case and forego any attorney's fees as class counsel, he still reserved the right to seek an award based on quantum meruit. The Court found that the husband's potential to seek quantum meruit fees disqualified the wife from serving as class counsel.Artin Betpera, an associate with Dorsey & Whitney, wrote a rather clever blog post about the case, the introduction to which said: There are plenty of things I'd like to do with my wife one day. Take a trip to Greece. Finally convince her to go camping with me (never going to happen). But filing a class action with her as a class representative is definitely not one of them.That's exactly what one husband-and-wife duo tried to pull in the Eastern District of New York. Senior Judge Frederic Block made quick work of the scheme.The attorney-husband did not find this amusing and filed suit for defamation. The firm and the blogger moved to dismiss for failure to state a cause of action. The plaintiff apparently failed to argue his claim that the post itself was defamatory, focusing instead on the headline. The U.S. Magistrate dismissed the case and the husband-attorney appealed.The Second Circuit explained that only assertions of fact as opposed to opinion could constitute libel.  Distinguishing between opinion and fact requires a consideration of the following factors: (1) whether the specific language in issue has a precise meaning which is readily understood; (2) whether the statements are capable of being proven true or false; and (3) whether either the full context of the communication in which the statement appears or the broader social context and surrounding circumstances are such as to signal readers or listeners that what is being read or heard is likely to be opinion, not factOpinion at *6-7. Based on this standard, the Second Circuit had no problem finding that the headline was a statement of opinion. We agree with the magistrate judge that the headline in this case constitutes opinion and is therefore not actionable. The tenor of the article reflects that it is meant to be not only informative but also amusing and entertaining, making hyperbole in the headline expected and reasonable. The article's placement on a law firm's blog also suggests that it is informed, at least in part, by the firm's and its author's opinions. The context of the statement therefore cuts against a determination that it is an assertion of fact meant to be taken literally. The language "exposes major spousal scheme" also does not have a readily understood precise meaning of the nefarious sort that is advanced by Wexler — it could just as easily mean exactly what happened here, that the TCPA decision brought to light an ethically questionable arrangement by a married couple (here, to represent both the attorney's and the class's fiscal interests in a class action). The use of "major" does not change this analysis, as that is a relative term, the applicability of which is a matter of opinion. An average reader would not understand the headline to be "an attempt to convey with technical precision literal facts about" Wexler. And because the statement does not have a readily understood precise meaning, it is not capable of being proved true or false.  Nor do we think that a reasonable reader would think that the headline was based on facts other than those disclosed in the article, which accurately describes the ruling of the court. The headline is therefore properly read as non-actionable opinion rather than fact, and Wexler's defamation claim fails.Opinion at *7-9 (cleaned up).The Court then invited Mr. Wexler to to show cause why sanctions should not be issued for filing a frivolous appeal.When I write about cases, it is common that one party wins and one party loses. The losing party may disagree with the opinion and on occasion, I have had persons tell me that the Court's fact finding was wrong or that their attorney was incompetent. I try to make it clear in my blogging that I am reporting on what a court found. I believe that I am free to report what a court finds, even if it is embarrassing or distasteful to one of the parties. This opinion takes that protection one step further. I often offer my opinion on what the implications of a case are.  However, this case shows that I can make my posts "not only informative but also amusing and entertaining."     

More owners are permanently shutting their doors after new lockdown orders, realizing that there may be no end in sight to the crisis.Gabriel Gordon shuttered his popular barbecue restaurant in California after the state saw a resurgence of coronavirus cases and imposed new restrictions.Credit...Horatio Baltz for The New York TimesBy Emily FlitterJuly 13, 2020On the last Friday of June, after Gov. Greg Abbott of Texas said that bars across the state would have to shut down a second time because coronavirus cases were skyrocketing, Mick Larkin decided he had had enough.No matter that Mr. Larkin, an owner of a karaoke club in Wichita Falls, Texas, had just paid $1,000 for perishable goods and protective equipment in anticipation of the weekend rush. No matter that the frozen margarita machine was full, that 175 plastic syringes with booze-infused Jell-O were in place, or that there were masks for staff members and hand sanitizer for guests.That day, June 26, Mr. Larkin and his partner dumped what they had just bought into the trash and decided to close their club, Krank It Karaoke, for good.“We did everything we were supposed to do,” Mr. Larkin said. “When he shut us down again, and after I put out all that money to meet their rules, I just said, ‘I can’t keep doing this.’”It was harrowing enough for small businesses — the bars, dental care practices, small law firms, day care centers and other storefronts that dot the streets and corners of every American town and city — to have to shut down after state officials imposed lockdowns in March to contain the pandemic.But the resurgence of the virus, especially in states such as Texas, Florida and California that had begun to reopen, has introduced a far darker reality for many small businesses: Their temporary closures might become permanent.Nearly 66,000 businesses have folded since March 1, according to data from Yelp, which provides a platform for local businesses to advertise their services and has been tracking announcements of closings posted on its site. From June 15 to June 29, the most recent period for which data is available, businesses were closing permanently at a higher rate than in the previous three months, Yelp found. During the same period, permanent closures increased by 3 percent overall, accounting for roughly 14 percent of total closures since March.Researchers at Harvard believe the rates of business closures are likely to be even higher. They estimated that nearly 110,000 small businesses across the country had decided to shut down permanently between early March and early May, based on data collected in weekly surveys by Alignable, a social media network for small-business owners.Christopher Stanton, an associate professor at Harvard Business School who was one of the researchers, said it was difficult to accurately gauge how many small businesses were closing because, once they shut their doors for good, the owners were hard to reach. He added that it could take up to a year before government officials knew the true toll the pandemic was taking on small businesses.At the moment, 39 states continue to record growing numbers of new cases daily.It is not clear how many of the businesses Yelp is tracking count as “small” — defined by the Small Business Administration as those with 500 or fewer employees. But the company found that, among the tracked businesses — which include restaurants, retailers and other independent, consumer-facing operations — retail businesses, led by beauty supply stores, have been closing at the highest rate since the pandemic began. Restaurants are the next hardest-hit group.ImageNick Muscari decided to permanently close Nick’s Sports Grill and Lounge in Lubbock after Texas’s second round of virus closures.Credit...Dylan Cole for The New York TimesSmall businesses account for 44 percent of all U.S. economic activity, according to the S.B.A., and closures on such an immense scale could devastate the country’s economic growth. If they were grouped together, small businesses would be among the country’s biggest employers, said Satyam Khanna, a resident fellow at the Institute for Corporate Governance and Finance at New York University School of Law who has written about the effects of the pandemic on small businesses.So when small businesses close en masse, an entire sector of the economy suffers, Mr. Khanna said. There is lower cash flow, higher debt and more unemployment. “That leads to a big drag on the eventual recovery,” he said. “Because they are such an important source of jobs, losing them the way we are losing them now is going to make things far worse than they otherwise need to be.”Because small businesses depend heavily on foot traffic and operate on thin margins, they are especially vulnerable to the ripple effects of a widespread shutdown.For nearly two decades, Rich Tokheim and his wife sold sports memorabilia — hats, T-shirts, coffee mugs and other trinkets — to fans in Omaha at their store, The Dugout. Since 2011, The Dugout has occupied prime real estate across the street from the city’s 24,000-seat baseball stadium, which usually hosts the College World Series each spring.The 2020 World Series was canceled in March. In the weeks that came after, other sporting events were scrapped — starting with college sports and extending to professional leagues that have struggled to relaunch their activities.Mr. Tokheim, 58, watched his business fall off with growing unease, but it was only after a friendly chat with a retired college athletic director in May that the gravity of his situation hit home. He was already worried about the state of the virus in Nebraska, and whether there was enough tracking. Then the athletic director predicted that if college football was canceled for the year, it would be the end of Division I sports as a whole.“That really put me in overdrive,” Mr. Tokheim said. He negotiated an early exit on his store lease and announced a clearance sale at the store. The Dugout closed for good on June 30.The government’s Paycheck Protection Program, rolled out in April and administered by the S.B.A., earmarked $660 billion of aid for small businesses, but stipulated that a loan would be forgiven only if most of it was used to pay employee wages for eight weeks. The rules were later relaxed, but in a sign of how many small-business owners did not feel confident that they would be on steady ground by the time repayment was due, roughly $130 billion of aid money remained untapped when the program ended in June.Even for those who took a P.P.P. loan, survival is no guarantee. Nick Muscari, a 38-year-old restaurateur in Lubbock, Texas, received one. His restaurant, Nick’s Sports Grill and Lounge, had been the culmination of Mr. Muscari’s life’s work — his years of toil as a waiter, pizza cook and manager at restaurants and bars beginning in his teenage years. Three years ago, he bought out the two partners who helped him start the restaurant in 2010. He considered it a crowning achievement, but to do so, he had to borrow money. He still owes a bank $80,000.ImageMr. Muscari still owes a bank $80,000 on his now-shuttered restaurant.Credit...Dylan Cole for The New York TimesImageNick’s Sports Grill and Lounge is now up for rent.Credit...Dylan Cole for The New York TimesImage“We never had anybody catch the virus in our establishment,” Mr. Muscari said.Credit...Dylan Cole for The New York TimesMr. Muscari tried to ride out the spring lockdown that temporarily shuttered his restaurant with the help of the P.P.P. money. But when the state’s second closure order took effect on June 26, he decided to close for good.“It had been in the back of our minds, just like, you know, if this happens again, can we make it?” Mr. Muscari said. “We were following all the rules and people were spread out. We never had anybody catch the virus in our establishment."Mr. Muscari, with the business closed and its 30 employees jobless, has nothing left but his house and his car. He also expects his landlord to try to sue him for the eight years’ worth of rent he is contracted to pay on his defunct restaurant’s space.Many small businesses are also finding it onerous keep up with constantly changing local guidelines, while others are deciding that no matter what their local officials say, it just is not safe to keep going. Gabriel Gordon, the owner of a tiny but popular barbecue restaurant in Seal Beach, Calif., decided to close permanently after studying the restaurant’s layout. He had determined that the kitchen would never be safe for multiple staff members to occupy at once while the virus was still active in the area.“It’s essentially two hallways that are 11 feet wide,” Mr. Gordon said, describing the shape of the restaurant, Beachwood BBQ. “There are food trucks that are larger than my kitchen.”Whatever the specific reasons may be for each closure, Justin Norman, Yelp’s vice president of data science, said that the federal government should offer small businesses more help. Mr. Norman said Yelp was concerned about the effects of small-business closures, especially those owned by people of color, on society. Yelp, however, also has a financial interest in maintaining a robust small-business environment, because it relies heavily on advertising by businesses on its platform.“The time is right now to inject more capital or we may lose them forever,” Mr. Norman said. “It’s going to make our economies worse, it’s going to make our communities worse.”