COVID-19 Viewpoints

A reminder for how property owners and real estate developers can protect themselves – and their projects – from downstream distress. There are six key issues that owners should consider when contracting for their next project.

For bankruptcy litigators – or any business which has been frustrated to receive a demand letter after one of its customers filed bankruptcy – one particular amendment stands out in the CARES ACT bill. The Act amended Section 547 of the Bankruptcy Code to provide suppliers and landlords with an additional potential challenge to actions brought to “claw back” payments made by a debtor in the 90 days preceding bankruptcy.

The CARES Act benefits both debtors and creditors by temporarily modifying several sections of the Bankruptcy Code, which may be of particular interest to creditors.

As the COVID-19 pandemic continues to disrupt businesses and markets, and companies begin to look to bankruptcy courts for relief from the resulting liquidity and operational distress, the issue of creditor and shareholder “blocking rights” seems likely to become an important topic as parties attempt to protect their investments.

In a May 21 letter to Treasury Secretary Steven Mnuchin, three Republican senators—Senator Lisa Murkowski (R-AK), Senator Susan M. Collins (R-ME), and Senator Thom Tillis (R-NC)—have requested that Treasury modify existing Internal Revenue Service (“IRS”) guidance on “start of construction” to provide production tax credit (“PTC”) and investment tax credit (“ITC”) relief to wind and solar projects affected by COVID-19 related disruptions.

On Friday, May 15, 2020, the Small Business Administration, in consultation with the U.Sh Department of the Treasury, released the Paycheck Protection Program (PPP) Loan Forgiveness Application. The application is accompanied by instructions on how to complete the application. Together, the application and the instructions answer a number of ambiguities about whether and how an employer will be able to receive forgiveness of all or a portion of a loan received under the PPP.

In the current environment, there exists historic levels of “dry powder” in the private equity industry. We have previously provided thoughts regarding challenges and opportunities facing the private equity industry generally.

Today the Small Business Administration (SBA) issued additional guidance with respect to the “necessity” certification required under the CARES Act in connection with the Paycheck Protection Program (PPP). The relevant guidance appears in FAQ 46, and it is very good news for borrowers who received PPP loans under $2 million (together with PPP loans to affiliates, if any). The SBA, in consultation with the U.S. Department of Treasury, has determined that a safe harbor will apply with respect to SBA’s review of the certification of necessity in connection with respect to such loans. Specifically, “[a]ny borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.”

As parties to merger or acquisition agreements carefully review their agreements to see what, if any, impacts the COVID-19 pandemic may have, the recent decision from the U.S. District Court for the Southern District of New York in Newmont Mining Corp. v. AngloGold Ashanti Ltd. provides meaningful guidance for the interpretation of Material Adverse Effect (“MAE”) provisions in agreements governed by New York law.

Given the possible health impacts of COVID-19, maintaining access to health care and insurance coverage is front of the mind for just about everyone. Continuation coverage under COBRA offers employees a route to continue job-based coverage in the event of job loss or reduction of hours.

Due to the economic impact of COVID-19, especially on smaller broker-dealers, FINRA will allow small firms more time to pay their Annual Assessment (comprised of the Gross Income Assessment and the Personal Assessment).

In its online forum regarding COVID-19/Coronavirus, FINRA has issued guidance related to PPP loans.

This article discusses the Federal Reserve’s Main Street Lending Program, including eligibility; impacts on debt service, capital structure, and strategic planning; and potential obstacles under existing debt and other agreements.

The Federal Reserve (Fed) announced that it is modifying this year's stress test to reflect how banks have performed during the COVID-19 pandemic.

Read about the temporary suspension of NYSE's $15 million minimum market capitalization requirement and shareholder approval rules for certain capital raising transactions.

This advisory reviews strategies that sponsors and their portfolio companies can use to manage defaults, including proactive measures to avoid default, amendments and waivers to realign with a company’s revised outlook, sponsor support through equity cures, and lender forbearance.