India’s Bankruptcy Code: FAQs

Amid a global economic crisis, Neha Mehta answers some frequently asked questions about filing bankruptcy in India.

Q1. When is a Corporate Debtor in default?

A. “Default” is the non-payment of a whole, or a part, of a Corporate Debt when due and payable. Erosion of net worth is not a default under the Code.

Q2. Can a financial institution proceed against a Corporate Debtor under the Code although it may have already taken action under the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI)?

A. Section 238 of the Code provides that its provisions shall have effect notwithstanding anything inconsistent in any other law or an instrument under any other law. Further the NCLT, Ahmedabad Bench, in Sarthak Creations Pvt. Ltd. vs Bank of Baroda & Others, held that pendency of proceedings before a Debt Recovery Tribunal (DRT) or invocation of SARFAESI Act, will not bar the commencement of CIRP, in view of the non-obstante provisions of section 238 of the Code.

Q3. What is a COC?

A. The COC (Committee of Creditors) is constituted of a Corporate Debtor’s financial creditors. It is a decision maker in CIRP.

Q4. Can a claim, or proof of claim, be filed, or submitted after the elapse of 14 days from the date of a demand notice?

A. Regulation 12 (2) of the CIRP Regulations provides that a Creditor, who fails to submit a claim with proof within the time stipulated in a public announcement inviting claims, may submit by the 19th day of the Insolvency Commencement Date. This amendment to the CIRP Regulations was made effective from July 2018.

Q5. Are home buyers deemed to ‘Creditors’ under the Code?

A. Section 5(8)(f) of the Code was brought into effect from 6th June, 2018 to provide that an amount raised from a real estate allottee is deemed to be a ‘borrowing’. The logic behind such amendment is that home buyers/allottees advance monies to buyers/allottees advance monies to developers, thereby financing a real estate project, and thus they will fall within the definition of a ‘Financial Creditor’ under the Code.

Q6. Would a moratorium ordered against a Corporate Debtor under the Code affect pending proceedings under section 138 of the Negotiable Instrument Act 1881 (NI Act)?

A. Section 138 of the NI Act is a penal provision empowering the competent court to order imprisonment or a fine. A fine is not a money claim or recovery against a Corporate Debtor, and an order of imprisonment against Directors of a Corporate Debtor does not affect CIRP. Therefore, proceedings under 138 of NI Act therefore will not be affected by a moratorium. Further, no criminal proceeding lie under Section 14 of the Code.

Q7. Does the Code provide for punishment against a Corporate Debtor that commits fraud?

A. Under Section 68 of the Code, if any officer of a Corporate Debtor wilfully conceals its property, he or she would be punishable with imprisonment for 3 to 5 years and a fine extending from INR 100,000 upto 10,000,000.

Q8. Can a Creditor and Corporate Debtor arrive at an ‘out of Court’ settlement and withdraw CIRP?

A. Yes, but with a 90% of COC members voting in favour of the settlement.

Q9. Can an RP reduce a claim amount if a Financial Creditor has claimed usurious or extortionate interest?

A. An RP can revise a claim admitted under Regulation 14 of the CIRP Regulations, subject to the RP collating information warranting the revision. While empowered to do so, the RP should, ideally, intimate the NCLT of the revision.

Q10. Can interest, overdue charges and related charges in respect of a credit facility be treated a part of a claim?

A. Yes.

Q11. In a liquidation of a Corporate Debtor, how will proceeds from the sale of assets charged to a secured creditor be treated?

A. If a secured creditor has participated in the liquidation process, it would relinquish its security interest to the liquidation estate, and receive proceeds from the sale of assets per the waterfall mechanism in Section 53 of the Code.

Q12. Can aggrieved employees, operational creditors appeal against not settlement of any outstanding claims?

A. Any person who is a party to, and aggrieved by, a resolution plan may appeal to the National Company Law Appellate Tribunal (NCLAT) under Section 61(3)(iii) of the Code. The appeal be within the grounds permitted.

Q13. Within what period from the approval of a resolution plan will a resolution applicant have to pay the resolution amount?

A. A payment schedule has to form part of a resolution plan, and on its approval, it binds all stakeholders. Therefore, the resolution plan will stipulate the period within which payment is to be made, and it will bound by it, upon the plan being approved by the COC and the NCLT.

Q14. What is the status of personal guarantors in a CIRP?

A. Notwithstanding the pendency of CIRP, Financial Creditors may invoke personal guarantees for causing payment of the debts of the Corporate Debtor.

Q15. Where would the CIRP process be initiated, if a Corporate Debtor has, for example, a corporate office in Delhi and its registered office in Mumbai?

A. The CIRP will have to be initiated in the jurisdiction of the Corporate Debtor’s registered office.

Q16. What is the application fee payable for initiating CIRP under the Code?

A. It is INR 2000 if the applicant is an Operational Creditor, and INR 25,000 if it is a Financial Creditor.

Disclaimer: This article is provided for informational purposes only and is not legal advice. For more advice on the topic, please contact the author.


E2 Visa Validity and Authorized Stay in the United States: Know the Difference

Cost of EB 5 Visa

Mark I. Davies is the Global Managing Partner and founder of our firm. Mark also Chairs our Global Business and Investor visa team and focuses his practice on EB5, L1, E2 and other business and investor visa solutions.

 

There is significant confusion as to the difference between E2 visa validity and the period of authorized stay in the United States.

What an E2 Visa Does?
A valid, unexpired, E2 visa gives you the ability to come to the US border and seek entry to the United States in E2 status.  Although an E2 visa does NOT grant the right to be inside the United States in E2 status or any other status it ordinarily results in a visa holder being lawfully admitted to the United States in E2 status.Beyond the tweet, there is very little detail on what would be covered in the executive order. Immigration is a broad concept in the United States, ranging from asylum and the rights of undocumented workers to green cards for investors under the EB-5 Visa program. Would, for example, spouses of Americans (K-1 visas) be included in a ban?

What is E2 Status
E2 status is legal status granted to individuals located in the United States who have been admitted to the United States under the terms and conditions of the E2 program or had their status changed to E2 status from another visa category.

How do I obtain E2 Status?
There are two ways to obtain E2 status:

  1. Using an E2 Visa to Seek Entry to the United States at an International Border
    When you use your E2 visa to come to a US border and seek entry to the United States the CBP officer at the border will approve or refuse your admittance into the United States in E2 visa status. Usually the officer at the border will admit the holder of a valid E2 visa holder into the United States for a period of two years of authorized stay, regardless of when the E2 visa expires.Please note that while a period of two years is usually granted on occasion CBP officers have granted a period of authorized stay of less than two years.  In addition, CBP officers often make mistakes when documenting the period of authorized stay in the US Government’s computer systems.
    Retrieve your Form I-94 here
  2. Change of Status
    If you are already in the United States in another visa status it is possible to “change status” to E2 status from within the United States.   In this way it is possible to be in lawful E2 status in the United States without ever having obtained an E2 visa.


My Authorized Stay is About to Expire but my E2 visa is still Valid?

The fact that you have a valid E2 visa is irrelevant to your period of authorized stay in the United States.  To extend your period of stay in lawful E2 status you can either:

  1. Apply for an extension of status form USCIS; or
  2. Leave the country and re-enter the US using your valid E2 visa. You will likely be given another two (2) year period of stay when you re-enter the US.

I am Inside the US and my E2 Visa has Expired
The fact that your E2 visa has expired is completely irrelevant to your period of authorized stay in the United States.  You can continue to live and work in the US until your period of authorized stay has expired.

When you next leave the United States you will need to go to a US consulate to obtain a new E2 visa renewed.  You will need a new E2 visa to re-enter the United States.

How do I know How Long my Period of Authorized E2 Stay is or if a Mistake has Been Made?
Every time you enter the US you must, within 24 hours, download a copy of your I-94 after entering the US.

Make sure the details are correct and that you have been granted a period of stay of two years.  If there is a mistake you can return to CBP at the port where you entered the US to have changes made.


The President’s Immigration Ban: Update

President Trump has signed the Executive Order temporarily suspending some visa categories for an initial 60 days. This mostly applies to people outside the United States seeking permanent residency / Green Cards, excluding the EB-5 program.
The State Department has just issued a clarification stating that the Order is not retroactive and that “no valid visas will be revoked under this proclamation.”
There are a number of exclusions and exemptions. We recommend you contact us to discuss your specific circumstances.

What is NOT included in the ban:

What is also NOT included in the ban, but subject to a 30-day review:

E-3 Australian Professional Specialty Visa

EB-5 Visas Exemption
The EB-5 Immigrant Investor Visa has been given a special exemption from the ban. EB-5 is a job-creating program. Each EB-5 investment is required to create ten American jobs. The EB-5 Immigrant Investor Program is a fast route to a Green Card for families or individuals able to invest $900,000.

Review of Non-Immigrant Visas
The Executive Order only covers immigrants outside the United States seeking permanent residency (Green Cards). Non-immigrant categories, such as the E-2 Visa, the L-1 Visa, and the H-1B Visa are not currently included in the ban.
However, the Executive Order does call for a review of non-immigrant programs within 30 days with a view to “other measures” affecting these categories. The Order instructs the Secretary of Labor, the Secretary of Homeland Security, and the Secretary of State to report recommendations to the President within 30 days regarding restrictions (if any) on non-immigrant visas.

Adjustment of Status
The order only applies to those seeking immigrant visas (i.e. those outside the US seeking to go through consular processing). It does not impact those inside the US already on a valid visa that are eligible to do Adjustment of Status (AOS). Clients should consult us before traveling outside of the United States if they have a pending AOS application or may be eligible to file one in the near future.

Our Advice
We recommend that anyone seeking a US visa proceed with their application. Much can change in the time it takes to prepare one.
With flights grounded and American embassies closed to consular appointments, the Executive Order makes limited material difference in the short term. There are likely to be a number of lawsuits challenging the ban. This is also an election year. A new administration could be expected to reverse this Order.
We will provide updates on the 30-day review of non-immigrant visas. Some non-immigrant categories, such as the E-2 Treaty Investor Visa, bring investment to the United States and create jobs.

Each client’s circumstances are different. Please contact us to discuss how this may affect you.

Contact Us


The President’s Immigration Ban: Why you Should Still Apply for a Visa

Cost of EB 5 Visa

Duncan Hill is marketing director at Davies & Associates LLC. Duncan is not a lawyer and nothing in this blog constitutes legal advice.

 

President Trump tweeted last night that he would sign an executive order banning immigration to the United States. While it is still unclear how this will play out, it is only likely to be a temporary setback. Anyone hoping to apply for a US visa should continue as normal if their circumstances permit.

“In light of the attack from the Invisible Enemy,” the president tweeted, “as well as the need to protect the jobs of our GREAT American Citizens, I will be signing an Executive Order to temporarily suspend immigration to the United States.”

Beyond the tweet, there is very little detail on what would be covered in the executive order. Immigration is a broad concept in the United States, ranging from asylum and the rights of undocumented workers to green cards for investors under the EB-5 Visa program. Would, for example, spouses of Americans (K-1 visas) be included in a ban?

Despite the lack of detail, it might still be advisable for would-be immigrants to press on with their applications. For one thing, any ban would likely cause a build-up of demand. Therefore, progressing an application would help secure a good position in the line once a ban is lifted.

While it is difficult to predict when such a lifting would occur (especially as the ban has not yet been ordered), there are still clues. For starters, President Trump said in his tweet this would only be temporary. Moreover, there are also likely to be legal challenges as there were over Executive Order 13769, the so-called “Muslim Ban”. Additionally, this being an election year, a change of administration in January 2021 would likely result in a reversal.

The second, closely related reason to persevere with an application is that it takes time to prepare one. Davies & Associates specializes in EB-5 visas, E-2 visas, and L-1 visas, all of which require significant preparation. This work could still be conducted while a ban was in progress.

Under the EB-5 program an entire family can obtain Green Cards in exchange for a minimum $900,000 investment. The US authorities are meticulous that each dollar is properly accounted for, and this can take time to document.

The United States Citizenship and Immigration Services (USCIS), which processes EB-5 applications, is still operating in spite of Coronavirus. While they are closed to public interactions, they continue to adjudicate cases. Processing times currently range from 30 to 50 months. Reform to the EB-5 adjudications process will probably reduce this, but it nevertheless points to a time frame much greater than a temporary immigration ban.

The E-2 visa allows a family to move to the United States for the purposes of owning and operating a business. The applicant must pitch a credible business case to the US authorities, which takes time to prepare.

E-2 applicants must come from an E-2 Treaty Country. If you are not from an E-2 Treaty country, it is possible to become eligible for an E-2 visa by first taking citizenship of a country that is eligible. The cheapest and most cost-effective of these is Grenada, Turkey and Montenegro.

Processing times for these citizenship-by-investment programs are quick. In Grenada, for example, citizenship can be obtained in less than three months. The Grenadian authorities are still processing applications, despite a strict lockdown. There is no requirement to visit the country so applications can be made remotely.

Davies & Associates has helped clients obtain the E-2 visa in this way. Countries non directly eligible for the E-2 visa include India, China, Russia, Vietnam, South Africa and Nigeria. Davies & Associates has helped people from non-Treaty countries become eligible for the E-2 visa.

The L-1A visa moves managers within the same company, from an overseas office to an American one. At D&A we specialize in so-called “new office” L1s. This is where we help clients set up a US branch of their existing business and then move themselves or a colleague there to manage the new office.

Inevitably it is necessary to set up the US office before applying for the visa. Again, this is work that could be done regardless of an immigration ban. Our corporate lawyers have helped hundreds of foreign businesses relocate and thrive in the United States.

So, given the time it takes to prepare a visa application and the uncertainty surrounding the ban, it is advisable to start applying regardless. The USCIS and American embassies would likely face a backlog once any ban is lifted. Secure yourself a good position in the queue by proceeding with your application.

 


Coronavirus Paradigm Shift in the Manufacturing Sectors

Post-Coronavirus Paradigm Shift in the Manufacturing Sector

Sukanya Advisor for EB-5, L1 and E2 Visas

Sukanya is an Associate in our Mumbai India office. She works with our Indian clients on EB-5, L1 and E2 visas coupled with Grenada citizenship.

China is considered the world’s manufacturing hub. However, there are reports that we might see a change in that soon. The coronavirus pandemic has made companies from across the world to move their production units out of China.
Even before the pandemic, the U.S. – China trade war had triggered many U.S. based companies to move their production units out of China. The coronavirus pandemic, therefore, is accelerating the in-flight shift.
In this situation, it is China’s neighbors who could potentially benefit from this. Countries like India, Japan, Bangladesh, Vietnam among others are favorable alternatives, given their geographical location, large pool of skilled manpower, low cost labor, tax policies etc.

Below are some key highlights for each of these countries-
Japan – Government of Japan has announced USD 2.2 billion to help manufacturers to shift production to Japan or other countries. Japan’s supply chain has been disrupted due to coronavirus outbreak. In addition to supporting manufacturers to move to Japan, they are also willing to help them move to other south Asian countries.

United States – China has remained America’s largest supply chain trading partner for almost three decades. After the trade war last year Trump administration had ordered the U.S. companies to immediately start looking for an alternative to China and build more products in the U.S. Now during coronavirus outbreak Larry Kudlow – White House National Economic Council Director – states that U.S. would pay the moving costs to every American company who wishes to leave China.

Bangladesh – Companies are keen on setting up their manufacturing units in Bangladesh as it is world’s second largest readymade garment exporter after China. It is the hub of garment manufacturing industry. It is an attractive option for the companies due to the vast availability of cheap labor, and has duty free access to over 52 countries including the U.S., the European countries, Australia, New Zealand, Russia, etc. Major global brands have their manufacturing units because of the advancement in technology and excellent quality products.

Vietnam – In the U.S. – China trade war, Vietnam has emerged as the biggest winner. For a number of reasons, Vietnam could be the next best option for many production units. Especially due to its proximity to China followed by low cost of labor. Its political stability and infrastructure is an added advantage for manufactures.

Thailand – It is well-positioned as an automobile manufacturing hub, as well as a leader in smart phones parts, electronic and computer components, and agricultural products to name a few. It offers an attractive business environment with stable economy for the investors.

India – While China loses business, India could be in the top list of major manufacturing companies. The introduction of ‘Make in India’ movement by the current government has been seen as a move to give it global recognition.

After the trade war about 200 American companies are looking to move their manufacturing units to India. The World Bank president Jim Yong Kim is of the opinion that those manufactures leaving China could end up moving to India and that may lead India to become a global manufacturing hub.

Tokyo Shoko Research had conducted a survey to find how many companies are looking to shift their production unit out of China. 2,600 companies had participated of which around 962 companies (37%) are willing to shift the production unit.

Tech giants like Google and Microsoft have planned to shift its production units to Vietnam, Thailand and India for manufacturing and producing smart phones, desktops computer, notebook and other devices. This shift is not only seen in the U.S. companies but also amongst European, Japanese and even Chinese companies.


EB-5 Visa Availability Now Determines I-526 Approvals Process

Cost of EB 5 Visa

Duncan Hill is marketing director at Davies & Associates LLC. Duncan is not a lawyer and nothing in this blog constitutes legal advice.

 

The United States Citizenship and Immigration Services (USCIS) has changed the way it processes I-526 petitions. Instead of operating the first-come-first-served approach, adjudications are now being determined by visa availability.

An I-526 petition is the application for the EB-5 Immigrant Investor Visa. This program offers a relatively straightforward path to a Green Card for families or individuals able to invest $900,000 to create ten jobs in the United States.

Under the previous approach, all I-526 applications were processed in the order in which they arrived at USCIS. This meant that resources were allocated to adjudicating I-526 forms submitted from mainland China, even though there is a long wait for visas for people born there.

The popularity of EB-5 in China means that the country has far exceeded its annual quota of 700 visas / no more than seven percent of the total 10,000 available visas for a given year. People born in mainland China currently face a multiple-year wait for an EB-5 visa.

Under the first-come-first-served approach, USCIS was compelled to adjudicate Chinese applications in sequence – only for them to sit in another queue once approved. Under the new system, USCIS is able to prioritize applications from people from countries that do not face a wait for a visa.

In practice, this means removing applications from mainland China from the queue until such a time as visas become available. The aim of the change is to reduce processing times for applicants from underrepresented countries. Standard processing times currently take up to 50 months.

Besides China, the other two countries with the greatest number of EB-5 applications are India and Vietnam. Neither is expected to be affected by this processing change in the short term. The priority dates for both countries are actually forecast to become “current” once again in the visa bulletin this summer.

However, it should be caveated that this may well be the artificial result of processing issues
at USCIS. Once these are worked through, visa availability would quickly diminish and applications from India and Vietnam would be placed on the backburner with China.

One upside to having an application pending for longer at USCIS is that a child might not “age out” while waiting for a visa to become available. A single EB-5 application can cover an entire family provided the children are under the age of 21.

In a quirk of the system, a child’s age is “frozen” while the application is pending with USCIS and they begin “aging” again once it is approved. This means some families see a child pass the age threshold after they have been approved but before a visa has become available. In this case, the child would require their own separate EB-5 application to move to the United States with the rest of the family. By having an application “pending” for longer, aging out would become less of a critical issue.

In spite of these changes, it is still possible to jump the queue by paying to expedite an I-526 petition. It is also possible to force USCIS to act on a pending application if you feel your EB-5 application has been unreasonably delayed. By filing a writ of mandamus in federal court, USCIS can be compelled to act on your I-526. Oftentimes, the mere threat of legal action will compel USCIS to adjudicate without needing to go the whole way towards litigation.

Our team has filed dozens of successful writs of mandamus actions against USCIS for unreasonably delaying immigrant petitions. We can assist regardless of whether your I-526 application was prepared by Davies & Associates.

To remain compliant with the EB-5 program, an applicant’s investment must create and sustain ten full-time American jobs. To ensure compliance, the vast majority of investors place their investments with a Regional Center.

Regional Centers use the investment to fund construction projects like hotels, condominiums and retail complexes. These projects require significant amounts of labor which ensures compliance with the job-creation requirement.

It is important to invest with a reputable Regional Center to maximize the chance of the return of your investment. Davies & Associates is able to provide due diligence on Regional Center projects.


The Solution to a Stuck EB-5 Visa Application – Filing Writ of Mandamus

The United States Citizenship & Immigration Services (USCIS) has slowed the pace at which it adjudicates I-526 petitions. The I-526 form demonstrates a petitioner’s eligibility for the EB-5 visa and constitutes the first official step in the application process for would-be immigrant investors.

The slowdown in adjudications are the result of political, administrative and external factors. They are evidenced in the fact that “priority dates” for countries in visa retrogression are quickly shifting forward. The changes to the priority dates is most likely the artificial result of low demand for visas caused by a slow rate of adjudication rather than meaningful changes to the number of applicants waiting for EB-5 visas.

 

USCIS Ombudsman

There are several courses of action open to any immigrant petitioner who suspects their I-526 application to have been unreasonably delayed. In the first instance, petitioners should contact the USCIS ombudsman’s office. This may not ultimately expedite your adjudication, but it is helpful to show evidence of seeking a solution should a petitioner need to subsequently escalate their case. Another option is to contact the senator or congressional representative covering the state or district where the EB-5 project is located.

 

Writ of Mandamus

It is possible to file a lawsuit in a federal court to determine whether your immigration petition has been unreasonably delayed. This lawsuit, known as a writ of mandamus, will have no bearing on whether or not your I-526 application is successfully approved. It does, however, force USCIS into adjudicating your case quickly if it is judged to have been unreasonably delayed. Sometimes simply initiating proceedings can galvanize action as USCIS has been known to adjudicate a plaintiff’s application in order to avoid progressing with the lawsuit.

 

Filing a Case

Since filing a writ of mandamus is a legal course of action which may require litigation, it is always advisable to seek advice from an attorney. Contact D&A for a free consultation to determine whether it would be advantageous for your I-526 petition. Our team has filed dozens of successful writs of mandamus actions against USCIS for unreasonably delaying immigrant petitions. We can assist regardless of whether your I-526 application was prepared by Davies & Associates. The average time between filing a writ of mandamus and receiving an adjudication is around two months, in some cases it can be significantly less.

 

Act Quickly

It is anticipated that USCIS might suddenly start processing applications at a faster pace. It is advisable to file a writ of mandamus as soon as possible to have your case reviewed ahead of a possible surge.


Options for US Business in the Current Economic Downturn

Cost of EB 5 Visa

Duncan Hill is marketing director at Davies & Associates LLC. Duncan is not a lawyer and nothing in this blog constitutes legal advice.

 

Businesses across the United States are reeling from the economic impact of the Covid-19 Coronavirus outbreak. Furloughed employees, disrupted supply chain, cancelled purchase orders, nosediving share prices and shuttered premises are all compounding to create an unprecedented challenge.

Over the past decade, Davies & Associates has brought hundreds of businesses and entrepreneurs to the United States. Our L-1 clients have expanded their existing business to America, our E-2 Clients have set up new business or purchased franchises, and our EB-5 Immigrant Investor clients have been granted the freedom to pursue their own business objectives.

 

Cashflow is Key

These clients come from all over the world, and what they are finding is that America is one of the best places to own a business in a global economic downturn. The country’s resilience, stemming from its diverse economy and historic commitment to business, means there are a range of options available to help businesses weather this storm.

Cashflow is always key to a business, but never more so than over the next few months. Different businesses inevitably have different amounts of cash buffers available. While some may be able to withstand a few months of this crisis, others cannot survive more than a few weeks. Since no one knows for certain how long the current shutdown will last, many businesses are going to need help. The United States now has an unprecedented array of federal and state programs in place to assist through this crisis.

 

Payment Protection Program

The latest and most high-profile support measure to become available is the Payment Protection Program (PPP). This is part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act signed by the president last week. The PPP is a loan scheme designed to prevent massive layoffs caused by disrupted trade and commerce.

The loans can be claimed for operating expenditures like salaries, health and retirement benefits, rent and mortgage payments, and utilities. Since funding is limited, loans to cover salaries are likely to be given preference.

Businesses claiming the loans are able to claim 100% forgiveness if they maintain headcount or rehire recently laid-off workers. You must also ensure not to reduce salaries by more than 25% for employees earning less than $100,000 a year. Those that do not comply will have to pay back some of the loan, deferred for 6-12 months, at an interest rate of 0.5%.

Businesses with 500 or fewer employees are eligible for this scheme, and this includes self-employed contractors. The CARES Act authorized $350 billion for the program. Because of its popularity it is advisable to apply early before funding runs out. Applications through approved lenders can be submitted from Friday 3rd April.

 

Economic Injury Disaster Loan

The Coronavirus pandemic has also been declared a disaster under the Small Business Administration Act, which means small businesses can also apply for an Economic Injury Disaster Loan (EIDL). Although businesses can apply for both EIDL and the PPP, there can be no double dipping with the PPP, so the loans must be used to cover different expenses.

Unlike the PPP, Economic Injury Disaster Loans are not new and have not been specifically introduced as a response to the Coronavirus pandemic. EIDLs include what is essentially a cash grant to businesses of $10,000. Any additional loan – up to the limit of $2 million- is subjected to repayment over three decades at low rates of interest.

 

State and Local Programs

Different states and municipalities are offering loans and grants of their own. For example, New York is offering grants to cover 40% of payroll and interest-free loans of up to $75,000 to businesses that can prove they have incurred losses of more than 25% because of Coronavirus.

Chicago is providing low interest loans to businesses with fewer than 50 employees and San Francisco is offering cash grants of up to $10,000 for companies with between 1 and 5 employees provided annual gross revenue is less than $2.5 million.

 

Tax incentives

Most people are aware that many taxpayers are in line for a $1,200 one-time rebate and that the deadline for filing federal taxes has been pushed from April to July. Other changes include the removal of a 10% penalty on people seeking to access retirement funds early, deferral of payroll taxes, and alterations to the tax on charitable contributions. Davies & Associates has a tax team able to assist clients with understanding their options.

 

International Debt Collection

Looking beyond the short-term assistance programs, the global economy is likely to be in disarray when it gets going again. One feature may be that people have difficulty paying their bills. D&A’s creditors’ advisory business can help chase payment of debts. Given the internationalization of modern supply chains, many debts will cut across national borders. D&A’s international reach, with offices and partnerships around the globe, means we can pursue debts for clients both in their home country and overseas. Debt collection in the United States is governed on a state by state basis

 

Bankruptcy

For firms struggling to pay their bills, one possible option is the bankruptcy system. While the term bankruptcy often implies something terminal, in the United States it is possible for firms to file for bankruptcy and continue operating. Under Chapter 11 of the bankruptcy code it is possible to reorganize your business and renegotiate your debts. Chapter 13 offers something similar for individuals on fixed incomes. The most common form of bankruptcy in the United States is Chapter 7 where assets are liquidated to pay off debts. It is important to engage an attorney to understand which assets could be legally protected from the liquidation process.

 

D&A Corporate Team

As you can see, there are lots of different measures in place to help individuals and businesses amid this unprecedented global crisis. And we are here to help. While D&A is most known for bringing people to the United States, we are often less well known for our corporate work once they get there.

Yet for certain visa categories, corporate work is essential. Immigration law and corporate law are natural bedfellows. For example, all new E-2 Visa applications and any “new office” L-1 Visas require a US entity to be established as part of the visa process.

Once these clients have moved to the United States, we stick by their side. Offering ongoing corporate services and tax advice in good times as well as tougher times.

 

These are some tough times and we are here to help.


Why now is a good time to prepare L1/E2 Application

David Cantor is a licensed attorney in the State of New York based in our Florence, Italy office. David oversees Client Relations for Davies & Associates Global Investor and Business Visa Practice.

As of March 18, US Citizenship and Immigration Services suspended in-person services until April 1st in order to combat the spread of the Coronavirus (COVID-19). It is highly likely that interviews and other critical Consular services will also be suspended beyond this date – in other words, it will not be possible to obtain an interview and visa for the United States until further notice. This includes all immigrant and non-immigrant visa categories, even visitor visas for the United States. 

 

Despite these major uncertainties, for individuals or businesses that are seriously considering a non-immigrant visa, it may still be a good time to move ahead. Certain non-immigrant visas, such as the L-1 (multinational manager/executive transfer) or E-2 (Treaty Investor), will permit an applicant to start/acquire a business in the United States. These favorable visa categories (L1 and E2) will provide work-authorization and social security numbers for qualified dependents (i.e. spouse and children under-21). 

At Davies & Associates we represent a diverse size of businesses and entrepreneurs – from boutique retailers to multinational entities. We represent individual investors as well as businesses seeking to expand their current operations into the United States. You can qualify for these favorable non-immigrant visa categories in virtually any industry, and one may successfully petition for an investor visa with a minimum of $80,000 – $100,000 USD investment, depending on the type of business and your five-year business plan. 

 

While the current state of affairs presents significant challenges and uncertainties, for those seriously considering US business expansions or investments, it is necessary to keep in mind the overall processing times of a respective application. Filing a L1 or E2 visa application is a complex, and oftentimes laborious process. In the larger picture, you can breakdown the processing timeline into two main parts: (1) Preparation of your case; and (2) Official Government Processing. 

 

  1. L1/E2 Casework Preparation. Average Timeline: 2-5+ months.

    This portion consists of everything required to build a strong L1/E2 application with your immigration attorneys. This may involve all the document collection, production of a five-year business plan, incorporation and formation of a US entity/bank accounts, securing a US commercial lease, hiring of US employees, mobilization of capital, and more.

  2. Official US Government Processing. Average Timeline: 1-3 months.

    The US government has several channels to lodge and application and processing timelines will vary depending on the visa category and geographic location. Waiting periods will also depend on factors such as government resources and staffing. 

 

In sum, clients seriously considering business expansion efforts into the United States must take into consideration the practical efforts involved in preparing and submitting a L1 or E2 application. Although it varies on a case-by-case basis, the average timeline for preparing this non-immigrant application may be 2-5+ months (not including official government processing).  Although it is uncertain, it is realistic to project that US Consulates will open within the near future. It is also likely that appointment and interview waiting periods will increase significantly due to a backlog of casework. For these reasons it is beneficial for clients to have a “ready application” for submission, and beat potential waiting periods that are likely to accrue over this period of time.

 

Can I form a US company from outside the United States? What about getting an Employer Identification Number (EIN) and a bank account? 

Some of the most practical challenges to the existing travel restrictions due to the Coronavirus (COVID-19) are those that inhibit a foreign applicant to focus on the US business incorporation or expansion. While there is no requirement that L1 or E2 applicants physically visit the United States before filing a L1/E2 application, there are some practical concerns. Obviously, for those wishing to launch a US business, many will want to have secured a commercial location and a base for their operations. However, for those that have a general idea, or can narrow down the State(s) where they wish to operate, there is nothing restricting you from establishing your US entity. At Davies & Associates we support our clients corporate needs and can advise you with regards to not only registering your US entity – but also in drafting all the corporate documents that will be necessary for your US business and operations. Without visiting the United States, you are also able to obtain the necessary tax IDs (i.e. EIN), that will permit you to obtain necessary licenses, as well as establish US bank accounts. If you are interested in learning more about establishing a US entity please CONTACT US today.

 


Shift in EB-5 Priority Dates for India and Vietnam

Sukanya is an Associate in our Mumbai India office. She works with our Indian clients on EB-5, L1 and E2 visas coupled with Grenada citizenship.

As per the recent update of US Visa Bulletin for the month of April 2020, we see a change in the final action dates for EB-5 preference cases for India and Vietnam. Priority Date means the date when the US Citizenship and Immigration Services – USCIS – receives the petition and form I-526. Each country has a different priority date depending on the petitions filed each year by each country. Please see the priority dates in the upcoming Visa Bulletin for April 2020, for India, Vietnam and China.

India:
1st January 2019 as compared to the date 22nd October 2018 as per the visa bulletin for March 2020.
Vietnam:
15th January 2017 as compared to the date 08th February 2017 as per the visa bulletin for March 2020.
China:
There is no solace for the petitioners in China as the priority date remains unchanged at 15th May 2015.

Overall, this might be good news for some petitioners from India and Vietnam, provided the United States Citizenship and Immigration Services (USCIS) has approved their I-526 petitions. It should also be kept in mind that this shift, even if substantial, may be due to low visa demand which is a result of low rate of I-526 processing by USCIS. Also, I-526 processing time might go down due to fewer applications after the change in the minimum investment amount of USD $500,000 to USD $900,000 post 21st November 2019. We may also see a rejuvenated interest for EB-5 in markets like India and Vietnam due to improvement in the priority dates. Although it is an interesting ‘wait and watch’ to conclude what the actual timelines for procuring the Green Card are, this definitely is a positive sign for prospective applicants.