COVID-19 (Coronavirus)

• Virtual Examination of I-9 Documentation Now Permitted for Employers Enrolled in E-Verify

  08.02/Alert

  Federal immigration law requires that, within three days after an employee’s first day of employment, an employer must confirm an employee’s identity and work authorization by physically examining the employee’s proof of identity and employment authorization documents. Employers must then complete Section 2, “Employer Review and Verification,” of Form I-9. Since March 2020, due to the COVID-19 pandemic, the Department of Homeland Security (DHS) and the U.S. Citizenship and Immigration Services (USCIS) had temporarily authorized employers to conduct virtual inspections of the documentation required to complete new employees’ Forms I-9. In May 2023, however, the DHS announced that the virtual inspection option would end on July 31, 2023, and in-person, physical examination requirements would resume on August 1, 2023. In addition, employers would be required to re-inspect any remotely inspected I-9 documents by August 30, 2023.

• Supreme Court of Virginia Strikes Down County Zoning Overhaul Adopted via Electronic Meetings During COVID-19 Pandemic

  05.15/Alert

  The Supreme Court of Virginia voided Fairfax County’s modernized zoning ordinance, known as zMOD. The Supreme Court decision, Berry v. Board of Supervisors of Fairfax County, 884 S.E.2d 515 (Va. 2023), made the zMOD ordinance void ab initio.

• Cal/OSHA COVID-19 Standards Are Here to Stay (For Another Two Years)

  12.19/Alert

  After numerous iterations and extensions of an emergency temporary standard, Cal/OSHA approved a non-emergency standard on December 15, 2022, set to take effect in January 2023.

• FCC Order Bans Certain Arrangements to Promote Competition in Multi-Tenant Buildings

  03.01/Alert

  On February 15, 2022, the Federal Communications Commission (FCC) released a Report and Order (the Order) adopting new rules to further broadband competition for the millions of Americans living and working in apartments, public housing, office buildings, and other multiple-tenant environments (MTEs).

• IRS Issues Guidance on Reporting of Tax-Exempt Income from PPP Loan Forgiveness

  12.06/Alert

• OSHA Emergency Temporary Standard Mandating COVID-19 Vaccination or Testing for Large Private-Sector Employers Is Issued and Temporarily Stayed

  11/09/2021

  On November 5, 2021 the Occupational Safety and Health Administration (OSHA) published its much-discussed COVID-19 Vaccination and Testing Emergency Temporary Standard (ETS) in the Federal Register. As anticipated in our earlier client alert, the ETS establishes mandatory COVID-19 safety protocols applicable to most employers with 100 or more employees. The ETS sets a baseline mandate that covered employers require, at a minimum, weekly COVID-19 viral testing of unvaccinated employees who work indoors at workplaces with co-workers or customers present, and that unvaccinated workers wear face coverings in shared settings. The ETS “is designed to strongly encourage” employers to choose to go beyond that minimum policy, however, by establishing, implementing, and enforcing a written mandatory vaccination policy. The ETS also includes other requirements, such as that employers must provide paid leave to enable employees to receive vaccination injections, must immediately remove of employees with COVID-19 from the workplace, and must track employees’ vaccination status. In setting guidelines for the implementation of these policies, the ETS answers many practical questions raised by employers in recent months, but other questions remain, especially due to legal challenges that have been filed in the days since publication of the ETS.

• Understanding What’s Behind the Uranium Spot Price Surge

  10.01/Alert

  Volatility in the uranium market must be carefully evaluated to fully understand the risks of potential investment.

• The Vaccine Mandate for Government Contractors

  09.29/Alert

  The Safer Federal Workforce Task Force recently issued guidance that requires the vast majority of prime contractors and subcontractors to ensure that their covered contractor employees, including those working remotely, are fully vaccinated against COVID-19 before the end of the year.

• K.C. Hopps Holds That Juries—Not Judges—Should Decide if Coronavirus Causes Physical Loss or Damage

  09.23/Alert

  The presence of virus on the premises that renders the property unsafe can cause physical loss or damage and trigger property coverage without any distinct, demonstrable physical alteration.

• OSHA to Require COVID-19 Vaccination or Testing Mandates for Large Private-Sector Employers

  09.10/Alert

  Under a forthcoming OSHA emergency temporary standard, private-sector employers with more than 100 employees will be required to mandate COVID-19 vaccination or weekly testing. Eliminating a testing alternative, federal employees and contractors will be required to be vaccinated, with limited exceptions.

• FDA Regulatory Approvals as the U.S. Emerges from the Immediate COVID-19 Emergency

  07.20/Alert

  Emergency Use Authorizations will play a role as the pandemic eases, but a transition to ordinary course approvals is underway.

• Cal/OSHA Finally Approves Revised COVID-19 Emergency Temporary Standards

  06.18/Alert

  To follow-up on our previous alert of June 15, 2021, California’s Occupational Safety and Health Standards Board (Board) has approved revisions to the COVID-19 Prevention Emergency Temporary Standards (ETS) that eliminate physical distancing requirements and update other requirements (e.g., face covering, testing, exclusion from work) for fully vaccinated employees. The new and improved ETS is expected to go into effect on or around June 28, 2021. Consistent with his earlier announcement, Governor Newsom signed an Executive Order on June 17 to make the ETS effective the day it is filed with the Office of Administrative Law.

• Cal/OSHA Eliminates Distancing, Mask Mandate for Vaccinated Workers

  06.15/Alert

  After receiving pressure from businesses and other regulators during lengthy public comment meetings in recent weeks, the California Occupational Safety and Health Administration (Cal/OSHA) has proposed another set of revisions to its COVID-19 Prevention Emergency Temporary Standards (ETS), to be considered by the Occupational Safety and Health Standards Board on June 17, 2021. If approved, the revised standards would take effect on June 28, 2021.

• Cal/OSHA to Vote on Revising COVID-19 Emergency Standards on June 3

  06.01/Alert

  As previously alerted, the California Occupational Safety and Health Administration (Cal/OSHA) recently proposed revisions to its COVID-19 Prevention Emergency Temporary Standards (ETS), which were to be considered by the Occupational Safety and Health Standards Board (Board) on May 20, 2021. However, on the eve of the meeting, Cal/OSHA issued a memorandum to the Board, requesting the Board not vote on the proposed revisions and allow Cal/OSHA to present a new proposal at a future meeting. On May 28, 2021, Cal/OSHA published an updated version of the proposed revisions, which will be the subject of public comment, Board discussion, and a Board vote on June 3, 2021.

• OSHA and Cal/OSHA Guidance for Fully Vaccinated Employees

  05.18/Alert

  As COVID-19 cases appear to be on the decline and more people are opting to become vaccinated, public health departments and workplace safety agencies are concurrently updating recommendations and guidance to reflect changes in the course of the pandemic. Although such recommendations and guidance are often in flux, below is a summary of where federal and California workplace safety agencies currently stand on the issue of fully vaccinated employees.

• Court Finds Pandemic Does Not Satisfy Lease’s Casualty Clause

  03.31/Alert

  This is another in a series of alerts on insolvency topics affecting real estate. In this alert, we discuss a new case from the Southern District of New York that extends the trend of courts enforcing leases against tenants forced to close due to the impact of the COVID-19 pandemic.

• COVID-19 Stimulus Package Includes $170 Billion for Education

  03.17/Alert

  The American Rescue Plan Act of 2021 (ARP)—the latest coronavirus-related stimulus legislation signed into law by President Biden on March 11, 2021—appropriates more than $122 billion for elementary and secondary education and almost $40 billion for institutions of higher education (IHEs). These funds are in addition to the relief funding allocated under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, as described here and here, as well as under the Consolidated Appropriations Act, 2021 (CAA), as described here. Funds appropriated under the ARP will remain available through September 30, 2023.  

• Congress Appropriates New Funds, Extends Eligibility for Shuttered Venue Operator Grants

  03.12/Alert

  The American Rescue Plan Act, signed into law on March 11, 2021 and summarized here, includes a brief but important section that will permit the recipients of Paycheck Protection Program (PPP) loans issued after December 27, 2020 to remain eligible for grants under the “Grants for Shuttered Venue Operators” (Grants) program, which the Small Business Administration (SBA) has yet to launch.

• $1.9 Trillion COVID-19 Relief Law Includes Funding for Several Broadband-Related Measures

  03.12/Alert

  The American Rescue Plan Act of 2021, the latest COVID-19 relief package signed into law on March 11, 2021, includes several provisions that target funding for broadband connectivity and infrastructure projects. Specifically, the law provides $7.1 billion to support connectivity and the purchase of eligible devices for schools and libraries, and establishes additional sources of funding for broadband through support to state and local governments, as well as payment assistance to individuals facing financial hardships associated with the coronavirus pandemic.

• DC Council Passes COVID-19 Pandemic Emergency Workplace Safety Statute

  02.16/Alert

  On February 1, 2021, DC Mayor Bowser signed emergency legislation passed by the DC Council, requiring DC employers to “adopt and implement social distancing and worker protection policies to prevent transmission of COVID-19 in the workplace” and that adhere to all applicable Mayor’s Orders related to the COVID-19 public health emergency. Titled the “Protecting Businesses and Workers from COVID-19 Congressional Review Emergency Amendment Act of 2021,” the Act was published in the DC Register on February 12, 2021 but took effect as of the Mayor’s signature and will remain in effect for up to 90 days. A companion bill (B24-0058), the “Workplace Safety During the COVID-19 Pandemic Emergency Amendment Act of 2021,” was passed by the Council and was transmitted to the Mayor on February 11, 2021; it has similar provisions and would replace—and have the effect of extending—the Congressional Review Emergency Amendment Act’s provisions.

• New York State Assembly Reintroduces Legislation Imposing Recording Tax on Mezzanine Debt and Certain Preferred Equity Investments

  02.16/Alert

  On January 22, 2021, members of the New York State Assembly introduced legislation that would require the recording of UCC financing statements in connection with the origination of mezzanine debt and certain types of equity investments in real estate assets when there exists mortgage debt with respect to same, underlying real property asset(s). It also would allow municipalities to collect recording taxes in connection with the creation of such indebtedness or investments. This bill is the most recent iteration of a previous proposed bill that was introduced last year in the New York State Senate.

• COVID-19 Business Interruption Losses: Time is of the Essence to Pursue Coverage

  02.12/Alert

  The United States declared a national emergency in response to COVID-19 on March 13, 2020, and states quickly followed with stay-at-home orders that impacted businesses and institutions nationwide. More than 10 months have passed since the COVID-19 pandemic emerged in the United States and the prevalence of the virus has had significant impacts, not only with respect to the number of people infected and lives lost, but also to the widespread physical damages and economic losses suffered by businesses.

• The Consolidated Appropriations Act, 2021 Extends and Expands Eligibility for Employee Retention Tax Credit

  02.01/Alert

  The Consolidated Appropriations Act, 2021 (the Act), signed into law in December 2020, extends and expands the employee retention tax credit originally enacted in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

• Copyright Small-Claims Court Established by Congress in the CASE Act

  01.27/Alert

  According to Register of Copyrights in its 2013 Report on Copyright Small Claims, “small claims issues are anything but small. On the contrary, they present a range of complex considerations, from constitutional constraints to procedural concerns to questions of what claims should be eligible for alternative treatment.” Before the recently enacted CASE Act, there had not been a small-claims court with jurisdiction to hear copyright claims.

• Congressional and Government Investigations in 2021: What to Expect from the Biden-Harris Administration and How to Prepare

  01.27/Alert

  Government investigations pose many risk management challenges. They are unpredictable, political and often public. If handled incorrectly, they can last for many years, spiral into multiple Congressional, criminal, and/or regulatory investigations at the state and federal levels, and generate serious reputational harm. Potential targets can take proactive steps to mitigate their risks.

• COVID-19 Relief: Loan Forgiveness Requirements and Loan Review Procedures for Renewed Paycheck Protection Program

  01.25/Alert

  On December 27, 2020, the Economic Aid Act was signed into law. The Economic Aid Act reinitiated the PPP, appropriating $284 billion for both First and Second Draw PPP Loans. The Act amended borrower eligibility criteria, added permissible uses of the loan proceeds and established new eligibility requirements for borrowers seeking Second Draw PPP Loans. We discussed these new provisions and SBA’s first implementing regulations here.

• Tour de Force: Contract Terminations Due to COVID-19-Based Force Majeure – Natural Disasters

  01.22/Alert

  On December 16, 2020, in a decision likely to have far-reaching implications for COVID-19 contract disputes, Judge Denise Cote of the Southern District of New York found that COVID-19 qualifies as a “natural disaster” excusing a contractual counterparty’s nonperformance under a force majeure provision. The plaintiff in JN Contemporary Art LLC v. Phillips Auctioneers, LLC, No. 1:20-cv-04370-DLC (S.D.N.Y. 2020) had entered into an agreement with an auction house (the defendant), pursuant to which the auction house agreed to hold an in-person event in May 2020 to sell the plaintiff’s artwork and guaranteed that the plaintiff would receive at least $5 million in sales proceeds. In March 2020, following governmental shutdown orders, the auction house postponed the event until June. Come June, the auction house terminated the agreement, in part on the basis that the economic conditions brought on by the pandemic would prevent it from realizing any profit on the sale, after paying the guaranteed amount to the plaintiff. The plaintiff filed suit for breach of contract shortly thereafter; the auction house moved to dismiss, arguing termination was permitted under the agreement’s force majeure provision, which provided:

  In the event that the auction is postponed for circumstances beyond our or your reasonable control, including, without limitation, as a result of natural disaster, fire, flood, general strike, war, armed conflict, terrorist attack or nuclear or chemical contamination, we may terminate this Agreement with immediate effect. In such event, our obligation to make payment of the Guaranteed Minimum shall be null and void and we shall have no other liability to you.

• Bankruptcy Court Rules Bankruptcy Code Does Not Permit Extended Rent Holiday for Retail Debtors

  01.11/Alert

  This is the eighth in a series of alerts on insolvency topics affecting real estate. In this alert, we discuss the portion of the recent Chuck E. Cheese decision denying the debtor’s/tenant’s request to defer paying rent after the 60-day “rent holiday” period prescribed in section 365(d)(3) of the Bankruptcy Code.

• Newest COVID-19 Stimulus Bill Provides Further Relief in Education Space

  01.11/Alert

  The Consolidated Appropriations Act, 2021 (CAA)—the latest COVID-19-related stimulus legislation signed into law on December 27, 2020—makes available almost $81.9 billion for the Education Stabilization Fund (ESF), of which $22.7 billion is set aside as relief funding to be distributed by the U.S. Department of Education (ED) to IHEs through the Higher Education Emergency Relief Fund (HEERF). Section 311(a). These funds are in addition to the relief funding allocated under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, as described here and here, and will remain available through September 30, 2022, for IHEs to prevent, prepare for, and respond to the COVID-19 on the postsecondary level.

• Legal and Practical Considerations for COVID-19 Vaccine Mandates in the Workplace

  01.11/Alert

  The good news that COVID-19 vaccinations have begun to be deployed has led to new decision points for employers: once their employees become eligible for the vaccine, should employers mandate that their workers receive the vaccine? Similar questions arise with opening premises and events to customers, conference attendees and other visitors. While requiring proof of vaccination may at first blush seem like a responsible measure, legal and practical considerations militate against an across-the-board vaccination mandate for most organizations.

• Latest COVID-19 Relief and Government Funding Package Includes Key Communications Provisions

  01.07/Alert

  The Continuing Appropriations Act, 2021 and Other Extensions Act, a $2.3 trillion COVID-19 relief and omnibus government funding package, contains several noteworthy communications-related measures, including $7 billion in funding for broadband initiatives and expanded television and radio station eligibility for the Paycheck Protection Program administered by the Small Business Administration (SBA).

• COVID-19 Relief Act Provides Grants for Shuttered Venue Operators Hard-Hit by the Pandemic

  01.04/Alert

  COVID-19 Relief Act

  On December 27, 2020, President Trump after initially balking, signed into law as part of the Consolidated Appropriations Act of 2021, H.R. 133, which, among its 5,600 pages, $900 billion, and other COVID-19 relief, appropriates $15 billion for Grants for Shuttered Venue Operators (Grants) to be made by the Small Business Administration (SBA). We recently provided a client alert (here) on the changes made by the new law, to a key SBA program, the Paycheck Protection Program (PPP). The PPP changes include making second draw loans available for the hardest-hit businesses and clarifying that forgiven PPP loans are tax deductible. The Act also provides certain tax benefits for Grants.

• Bipartisan Breakthrough: Congress Passes and President Trump Signs $900 Billion Stimulus

  12.30/Alert

  Nine months after enacting the $2.2 trillion CARES Act, on December 21 lawmakers voted on and passed an additional $900 billion relief package. The compromise bill resulted from a series of intense negotiations that also produced a $1.4 trillion bill to fund the government through September 30, 2021, thereby avoiding a government shutdown. President Trump signed both bills on December 27.

• Legal Considerations When an Employee Dies

  12.09/Alert

  The death of an employee can be devastating and confusing to an employer and its workforce. The grim statistics on deaths from the COVID-19 pandemic—well over a quarter million in the U.S. as of the date of this alert, with infection rates rising—mean that many employers have already had to address this situation or begin planning for the sad eventuality. When an employee dies—regardless of the cause—employers often want to immediately help the employee’s family financially in their time of grief, but a number of administrative, legal, and tax-related issues must be considered before an employer pays final compensation and benefits to the beneficiaries or estate of the deceased employee.

• Tour de Force: Force Majeure in Civil Law Jurisdictions – A Superior Force Majeure Doctrine?

  12.02/Alert

  As discussed in prior articles, the doctrine of force majeure in common law jurisdictions is largely a creature of contract and is—typically—not codified. Even when codified (see, e.g., Cal. Civ. Code § 3526), judicial precedent defines the doctrine’s contours, just as it does the sister excuse doctrines of impossibility, impracticability, and frustration of purpose (and, indeed, if parties choose to allocate risk by including a force majeure provision in their contract, those sister doctrines are even more challenging to pursue).

• What Will the Biden/Harris COVID-19 Plan Mean for Business?

  11.11/Alert

  The incoming Biden Administration promises a more nationalized approach to combatting the COVID-19 public health crisis, plus a large economic stimulus response focused on unemployment, paid leave, state and local government support and support to small- and medium-sized businesses.

• Paycheck Protection Program Update: New SBA Questionnaires Ask Borrowers of $2 million or More to Justify Economic Necessity of PPP Loans

  11.03/Alert

  The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), passed on March 27, 2020, provided forgivable loans of up to $10 million to qualifying small businesses under the PPP. We have provided client alerts over the last several months on numerous aspects of the program, including: loan eligibility and “affiliation” concerns; the certification of loan “necessity”; changes to the program brought about by the PPP Flexibility Act; and the mechanics of loan forgiveness, here and here.

• Distressed Real Estate During COVID-19: Mezzanine Loans Behind Construction Loans—Special Considerations and Intercreditor Agreement Provisions

  10.26/Alert

  As more fully described in our prior alert on Intercreditor Agreements (ICAs), and by way of a short introduction to mezzanine loans generally, the mezzanine lender in a single mezzanine loan structure makes a mezzanine loan to the mortgage borrower’s owner(s) (the “mezzanine borrower”) and the mezzanine loan is secured by the mezzanine borrower’s equity interest in the mortgage borrower (a single purpose entity that is not the property owner entity). Instead of a lien on the underlying real property, the mezzanine lender takes a pledge of equity interests in the mortgage borrower. This means that in the event of an enforcement action by the senior lender under a senior mortgage, a mezzanine lender’s loan is extinguished if the mortgage lender forecloses on its mortgage loan or accepts a deed in lieu. The mezzanine loan’s collateral only has value if the underlying property (or anticipated development potential) exceeds the amount of the mortgage debt. As a result, the mezzanine loan is vulnerable if there are intervening liens (such as real estate tax liens, mechanic’s liens or judgment liens) since its collateral is only an indirect interest in the property—and a foreclosing mezzanine lender indirectly becomes exposed to all such outstanding liens and liabilities without having the ability to foreclose any of them out. This puts the mezzanine lender at greater risk—and in exchange for this risk the mezzanine loan coupon is traditionally quite a bit higher than the mortgage loan coupon. Note that we have assumed in this article, for sake of simplicity, that there is a mortgage loan and a single mezzanine loan.

• Tour de Force: COVID-19 Continues to Impact Leases While Cases Implicating Force Majeure Await Decisions

  10.23/Alert

  Real estate litigation continues, presenting new force majeure arguments.
  Seven months into the pandemic, the real estate sector continues its struggle to conduct day-to-day commercial operations in light of the continued spread of COVID-19 and varying degrees of government-imposed shutdowns.

• Distressed Real Estate During COVID-19: The Role of Intercreditor Agreements between Mortgage Lenders and Mezzanine Lenders

  10.19/Alert

  With the passage of time since the first COVID-related lockdowns, many real estate lenders are no longer willing to forbear from collections and modify repayment terms and instead are pivoting to considering, or in fact exercising, their remedies. At this juncture, some borrowers are also asking to “turn in the keys”—particularly in the hardest hit sectors of hospitality and retail. For mortgage lenders, this may mean accelerating the debt and proceeding to a real estate foreclosure of the mortgaged property. For mezzanine lenders, this may mean conducting a UCC foreclosure of the pledged equity. Besides confirming subordination of the mezzanine loan to the mortgage loan, intercreditor agreements (ICAs) address many of the fact patterns described above, along with granting cure rights and purchase rights to the mezzanine lender. These provisions can present both challenges and opportunities.

• Court Dismisses COVID-19 Flight Cancellation and Refund Class Action Lawsuit Brought Against Norwegian Air

  09.23/Alert

  Since the coronavirus pandemic started, there have been dozens of class actions brought against airlines by passengers seeking refunds and damages for flights cancelled due to COVID-19 and the related travel ban.

• Ohio Passes a Liability Protection Statute, Joining a Growing Number of States

  09.21/Alert

  Ohio becomes the next state looking to find a balance between opening businesses and protecting business from liability relating to the ongoing pandemic. On September 14, 2020, Ohio Governor Mike DeWine signed House Bill 606 (“An Act to Grant Immunity to Essential Workers who Transmit COVID-19”), an act establishing two forms of qualified immunity from civil liability for claims relating to the coronavirus crisis and/or similar emergencies. Both houses of the Ohio General Assembly passed the act on September 2, 2020, over the objections of Democrats in the legislature. The Ohio House originally passed a version of the bill in late May, and the Senate passed a revised version of the bill in early June, but the bill languished for two months in the legislature before the House picked up the bill again to resolve differences between the two bills that had passed.

• Home Rule in a Global Pandemic

  09.14/Alert

  While Washington, D.C. license plates have included the phrase “taxation without representation” since 2000—updated in 2016 to “end taxation without representation”—battling COVID-19 has renewed the call for D.C. statehood.

• IRS Issues Guidance Related to Executive Order Permitting the Deferral of Employee Social Security Tax during COVID-19 Pandemic

  09.04/Alert

  On August 28, the IRS issued guidance, Notice 2020-65, implementing President Trump’s Executive Order related to the deferral of the employee portion of Social Security taxes. In summary, based on the guidance it appears that employers are not required to permit the deferral, and because of the potential pitfalls and drawbacks described below, employers should consider not deferring any employee’s Social Security taxes absent a compelling reason.

• OSHA Overwhelmed by Pandemic-Related Whistleblower Complaints

  08.28/Alert

  In an April 8, 2020 news release, OSHA reminded employers “it is illegal to retaliate against workers because they report unsafe and unhealthful working conditions during the coronavirus pandemic.” Examples of retaliation include “terminations, demotions, denials of overtime or promotion, or reductions in pay or hours.”

• Focus on Forgiveness: The Latest Paycheck Protection Program Regulatory Developments

  08.27/Alert

  The Paycheck Protection Program (PPP) closed for new loans on August 8, 2020, though a renewal is currently being negotiated in Congress.1 Regardless of the future of new loans, as PPP borrowers continue through the lifecycle of the program by preparing to apply for loan forgiveness, the Small Business Administration (SBA) has continued to issue important new regulations and guidance that will impact their forgiveness analysis. We summarize below some of these important new developments.

• Tour de Force: The Impact of a Force Majeure Clause (or Lack Thereof) on Other Excuse Doctrines

  08.24/Alert

  The Absence of a Force Majeure Clause
  In common law jurisdictions, force majeure is a creature of contract, meaning that the doctrine cannot be invoked absent an express provision authorizing the parties to do so. Other excuse doctrines, however, exist at the common law—namely impossibility and frustration of purpose. The former doctrine is triggered by the occurrence of a contingency the non-occurrence of which was a basic assumption on which the contract was made. The latter doctrine is available when a party’s principal purpose is substantially frustrated without its fault by such a contingency, even if performance remains possible.

• Distressed Real Estate During COVID-19: Court Finds UCC Foreclosure “Commercially Unreasonable” Because of Coronavirus-Related Market Turmoil

  08.21/Alert

  On March 20, 2020, Governor Andrew Cuomo issued an order (the “Executive Order”) pausing, among other things, any residential or commercial mortgage foreclosure actions. On August 3, 2020, a New York court addressed the question of whether that order prohibits a mezzanine lender from foreclosing on its security interest in the equity interests of a mezzanine borrower whose sole asset is the ownership interests in a company whose principal asset is real estate. In Shelbourne BRF LLC v. SR 677 BWAY LLC (Index No. 652971/2020), the New York County Supreme Court granted the borrower’s motion for a preliminary injunction precluding the mezzanine lender from proceeding with its UCC foreclosure. This is the third time since the issuance of the Executive Order that a New York Court has confronted this question, and the second time since the issuance of the Executive Order that a New York court has enjoined a mezzanine foreclosure sale from going forward. The court’s decision in Shelbourne, however, may have a wider effect than the earlier cases and may result in the pausing of all mezzanine loan foreclosures in New York until October 15, 2020.

• DC Council Acts to Extend COVID-19 Relief for Tenants and Others

  08.18/Alert

  The District of Columbia Council passed Bill 23-869, the “Coronavirus Support Second Congressional Review Emergency Amendment Act of 2020.” This bill, once signed by the Mayor, will extend previous emergency legislation, Act 23-238, the “Coronavirus Support Congressional Review Emergency Amendment Act of 2020,” which is set to expire on September 6, 2020. This is omnibus legislation, intended to provide a wide variety of support for District residents and businesses affected by the COVID-19 public health emergency. Below, we discuss select aspects of the legislation in its Title IV, Housing and Tenant Protections.

• Understanding the New $60 Billion U.S. International Development Finance Corporation (DFC)

  08.17/Alert

  At the start of 2020, the U.S. International Development Finance Corporation (DFC) finally became operational after more than a year of organizational and budgetary delays. Signed into law as a part of the 2018 BUILD Act, the DFC is a $60 billion investment agency that merged the Overseas Private Investment Corporation (OPIC) with other foreign investment programs and added new objectives. DFC has a broader development objective than OPIC’s mission and offers increased services to lower- and middle-income economies, with nearly 100 countries identified as priority areas.

• COVID-19 Business Interruption Litigation May Be Consolidated for a Select Few

  08.13/Alert

  With hundreds of cases now pending nationwide involving insurance coverage claims for business interruptions stemming from the COVID-19 pandemic, a federal panel has been considering the prospect of consolidating the litigation into one multidistrict litigation (MDL) to promote their efficient resolution. On August 12, 2020, the panel issued a decision ruling out a single nationwide MDL, but leaving open the possibility of smaller, insurer-specific MDLs.

• Distressed Real Estate During COVID-19: Options Beyond PPP Loans

  08.12/Alert

  As a result of the COVID-19 pandemic, businesses across the country have faced severe economic hardship. Congress has responded with initiatives such as the Paycheck Protection Program and the Main Street Lending Program (MSLP), but these programs have not been designed with the commercial real estate market in mind. Recently, Representatives Van Taylor (R-TX), Al Lawson (D-FL) and Andy Barr (R-KY) introduced the “Helping Open Properties Endeavor Act of 2020” (HOPE Act) to provide assistance to this sector. If the bill becomes law, it will work in conjunction with existing provisions of the Main Street Lending Program to lend strong support to commercial real estate owners.

• Distressed Real Estate During the COVID-19 Pandemic: Deeds in Lieu of Foreclosure Involving Commercial Real Estate

  08.12/Alert

  Often, deeds in lieu are considered or delivered and accepted in the context of a mortgage financing (also including financings which involve a deed of trust or other similar instruments)—when the borrower (typically, a special purpose entity) is in default or at risk of imminent default and there is little to no equity remaining in the project. Viewed through the borrower’s lens, the consequence of an uncured default is losing the property.

• California Releases New Reopening Guidance for Employers

  08.10/Alert

  On July 24, 2020, the California Department of Public Health (CDPH) released reopening guidance for employers in a COVID-19 Employer Playbook for a Safe Reopening, which it followed up by publishing Safe Reopening FAQs for Workers and Employers on July 28, 2020.

• NLRB Establishes New Test for Employer Discharge of Employees for Abusive Comments

  08.05/Alert

  Despite this broadened standard, employers should still be cautious about disciplining or discharging employees who engage in protected concerted activity regarding the terms and conditions of their employment, which can include discussions of COVID-related concerns and race relations, along with other emotionally, politically, or culturally sensitive topics. The National Labor Relations Board (NLRB) has adopted a new standard that will allow employers to more readily discipline employees who have made abusive statements, even when connected to otherwise protected, concerted activity. Under the prior standard, the NLRB had found that employers had engaged in an unfair labor practices on various occasions when they discharged employees who had used profanity against managers or shouted racial slurs while also engaging in activities that are protected by Section 7 of the National Labor Relations Act (NLRA).

• Senate Republicans Unveil Proposed COVID-19 Liability Shield

  07.29/Alert

  Senate Republicans have recently unveiled their proposed liability protection measures intended to be included with the next Congressional COVID-19 pandemic response bill. Republicans have long signaled that providing businesses a federal liability shield is a top legislative priority for future relief bills, and Senate Majority Leader Mitch McConnell’s office has now released the text of the SAFE TO WORK Act, a legislative measure that could provide key liability protections for an array of businesses and organizations for COVID-19-related lawsuits. While the measure will likely face partisan opposition to its enactment, if passed, the liability shield would preempt many of the state law measures currently in place, and provide uniform protections for not just businesses, but also nonprofits, state and local governments, schools, and other organizations currently facing unknown liability risks from the COVID-19 pandemic.

• Oregon COVID-19 Law Halts Foreclosures, Expands Borrower Protections

  07.28/Alert

  On June 30th, 2020, Oregon governor Kate Brown signed into law HB 4204, providing sweeping protections to mortgagors and putting a moratorium on foreclosure proceedings. This law also requires all lenders operating within the state to provide written notice by mail to every borrower by August 29, 2020 of the protections added by the bill. This law applies to all lenders who hold a collateral interest in property or a retail installment contract within the state of Oregon, regardless of the lenders’ location. These protections will remain in place until 90 days after the end of the state’s COVID-19 “emergency period,” which is currently ends on September 30th but is likely to be extended.

• Virginia Adopts COVID-19 Workplace Safety Mandates

  07.23/Alert

  After it recently announced plans to issue the first statewide Coronavirus workplace safety rules in the U.S., the Virginia Department of Labor and Industry (DOLI) has published emergency temporary regulations under the authority of the Virginia Occupational Safety and Health (VOSH) Program. The regulations, which are expected to take effect during the week of July 27, 2020 after being published in a Richmond newspaper, will remain in effect for six months. Violations of these standards will subject Virginia employers to penalties under the existing VOSH penalty standards, which range from up to $13,047 for serious and certain other violations, to up to $130,463 for willful and repeated violations. This alert summarizes key provisions of the regulations, but Virginia employers should review the detailed regulatory requirements in full.

• Virginia Adopts First COVID-19 Workplace Safety Mandates

  07.17/Alert

  The Nation’s First Coronavirus Workplace Safety Rules
  On Wednesday July 15, Virginia’s Department of Labor and Industry’s Safety and Health Codes Board (the Department) announced the first coronavirus-related workplace safety regulation in the United States (Workplace Rules). This mandate follows an executive order issued by Governor Ralph Northam in late May that directed the Department to create infectious disease regulation. The Workplace Rules will require businesses under the jurisdiction of the Virginia Occupational Health and Safety Administration to implement safety measures to protect those who have been exposed to and infected by COVID-19 at the workplace. The Workplace Rules will likely come into force toward the end of July once they are published in a newspaper of general circulation. They will then remain in effect for a period of six months, after which they could become permanent if adopted through legislative enactment.

• Going Dark: Deregistration in the COVID-19 Era

  07.17/Alert

  In the wake of the recent economic downturn and resulting liquidity concerns, companies subject to public reporting requirements are reconsidering whether the advantages of a public listing outweigh the burdens of ongoing reporting and compliance obligations. Deregistration, or “going dark,” is an increasingly appealing alternative for companies seeking to avoid Securities and Exchange Commission (SEC) reporting obligations and associated costs.

• Court Holds COVID-19 Executive Order Triggers Lease’s Force Majeure Clause, Excusing Some Rent Obligations

  07.16/Alert

  In June 2020, the United States Bankruptcy Court for the Northern District of Illinois issued its decision, In re Hitz Restaurant Group (No. 20-B-05012, 2020 WL 2924523 (Bankr. N.D. Ill. June 3, 2020)). The Court held that the Illinois Governor’s Executive Order, issued in response to the ongoing COVID-19 pandemic, triggered the force majeure clause of a lease and excused part of the tenant’s rent payment obligations. For some, this decision was surprising because force majeure clauses usually do not excuse, wholesale, payment obligations.

• Supply Chain Threats and Cybersecurity Compliance Issues on the Horizon

  07.16/Alert

  U.S. government agencies continue to implement new rules to guard against supply chain threats and mitigate cybersecurity risks. We have previously discussed regulations aimed at excluding, and in some cases removing, Chinese-origin equipment from U.S. telecommunication networks and supply chains. In addition to discussing recent developments related to those regulations, this alert examines how the Department of Defense (DoD) and other agencies plan to mitigate cybersecurity risk at the contractor level.

• The Limited Pandemic Federal Liability Protections

  07.15/Alert

  With the continued public health threat posed by COVID-19, many businesses that have remained open or that are planning their reopening face legal risks of civil liability relating to employees and consumers who are injured as a result of the coronavirus contracted on their premises. As part of the federal pandemic response, the federal government has included legislation and issued administrative declarations providing limited liability protections aimed specifically at health care providers and manufacturers and distributors of health care products used for the current public health crisis.

• New Privacy Laws in California and New York Are on a Collision Course with the COVID-19 Technology Boom

  07.15/Alert

  Stay-at-home and shelter-in-place orders prompted by the COVID-19 pandemic have already led to a dramatic increase in the reliance on technology—and the generation and collection of extensive personally identifiable information (PII)—for myriad personal and professional purposes. As businesses now contemplate how to safely welcome customers, guests and employees back to their physical premises, the collection of PII is only likely to increase in the form of virus and antibody testing, temperature taking, video monitoring to ensure social distancing, contact tracing via location tracking, and similar preventative measures based on the collection of biometric and other personal data.

• DoD Memorandum Discusses Contractor Reimbursement for COVID-19 Expenses

  07.14/Alert

  A memorandum released on July 2, 2020 by Acting Principal Director for Defense Pricing Kim Herrington provides guidance on some of the action taken by the Department of Defense (DoD) in its efforts to support its contractors with reimbursement for the related impacts and costs incurred by DoD contractors in response to the COVID-19 pandemic. The memorandum highlights the possibility of contractor cost recovery for measures that may have been taken by industry to prevent the spread of COVID-19 and allow facilities to remain open and productive during the pandemic. It further directs contracting officers to use their experience and skill to find innovative solutions to both protect government interests and ensure the continued health of the defense industrial base.

• The Economic Recovery: States Offer Varied Liability Protections for Businesses

  07.13/Alert

  Pre-pandemic, well-advised business owners could have a good understanding of their potential liabilities to customers and employees for safety and health risks in their workplace. Now, in the midst of a pandemic, businesses are uncertain what their potential liabilities may be to customers or employees who contract COVID-19 and suffer harm as a result. Instead of clear and uniform guidelines for proper precautions, businesses face evolving and difficult-to-apply laws and guidance, and a correspondingly increased risk for lawsuits.

• Impact of Remote Working on End User Computing Solutions and Services

  07.10/Alert

  Twitter and Square have announced that all of their employees may remain working from home “forever.” Facebook expects half of its 48,000 employees to be working remotely in the next five to 10 years. And it is not only leading tech companies that are contemplating a major shift toward remote working. A recent Gartner survey of 317 CFOs and finance leaders revealed that 47% of respondents will move at least 10% of their on-site employees to permanent remote positions, while 74% will move at least 5% of their previously on-site workforce to permanently remote positions. Overall, the Gartner survey showed that 48% of employees will likely work remotely at least part of the time after COVID-19.

• SBA Discloses Identities of PPP Borrowers

  07.07/Alert

  SBA, in conjunction with the Department of the Treasury, announced in a June 6, 2020 press release that it would disclose “detailed loan-level data” regarding all of the 4.9 million PPP loans made to date. Recent legislation, which we summarized here, extended the deadline to apply for new PPP loans to August 8, 2020.

• Tour de Force: Do the Current Economic Conditions Caused by COVID-19 Constitute a Force Majeure Event?

  07.01/Alert

  Past Economic Crises Typically Have Not Constituted Force Majeure Events

  In most jurisdictions, courts have been reluctant to find that an extreme economic downturn, such as the Great Recession of 2008 or the earlier post-9/11 downturn, constitutes a force majeure event excusing performance of a party’s contractual obligations.

• The Main Street Lending Program – Avoiding the Potholes on the Road to Recovery

  06.17/Alert

  Introduction

  Under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Congress authorized the Treasury Department to provide more than $450 billion for loans, loan guarantees, and investments in support of the Federal Reserve’s lending facilities.

• President’s Executive Order to Expedite Environmental Reviews of Infrastructure Pushes the Envelope on the Interpretation of Emergency Authorities

  06.15/Alert

  The Key Environmental Laws at Issue

  Citing the economic downturn caused by the outbreak of COVID-19, on June 4, 2020, President Trump signed an executive order (EO) directing federal agencies to invoke emergency powers available to them to expedite the environmental review and permitting of infrastructure projects. The EO explicitly enumerates the emergency provisions of the following federal laws:

• Tour de Force: What Constitutes an “Act of God,” and Other Developments in Force Majeure Law

  06.15/Alert

  What is an Act of God?

  Absent an express reference to “epidemics” or “pandemics,” a contracting party seeking to invoke a force majeure clause is most likely to look to catch-all language like “Acts of God” or events “not within the parties’ reasonable control” as the most likely language to cover COVID-19. Historically, courts indeed defined “Act of God” to encompass sickness. See, e.g., Herter v. Mullen, 159 N.Y. 28, 37 (1899) (“The disability of a party to do the particular thing, or to perform the contract by reason of sickness is held to be a disability by the act of God.”); Love v. Barnesville Mfg. Co., 19 Del. 152, 50 A. 536, 537 (Del. Super. Ct. 1901) (“The defendant would not be liable for damages caused solely by the act of God, such as an epidemic of sickness in the defendant’s factory.”).

• Key Changes to Paycheck Protection Program Await President’s Signature

  06.04/Alert

  Both the House and Senate have passed a bipartisan bill to modify elements of the PPP established by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The legislation is intended to provide a “quick fix” to obstacles faced by small businesses seeking relief under the forgivable loan program.

• Updated CDC Guidelines Impact Business Districts, Office Buildings and Their Tenants, and Users

  06.01/Alert

  For the past two-and-a-half months, unlike many service workers, most white-collar office workers have been able to work from home (WFH). While some companies like Twitter and Facebook have implemented permanent “work from home” policies, many other companies are contemplating when and how to bring their workforces back to the office. National attention has now turned to “returning to work” and the changes needed to ensure workplace safety, including for those in office buildings.

• Tour de Force: Tracking the Evolution of COVID-19 as a Force Majeure Event

  06.01/Alert

  This is the first issue of a new client alert series titled Tour de Force, focused on the doctrine of force majeure and its significance in a post-COVID-19 world. Each issue will explore a discrete nuance in application of the force majeure doctrine and include an annotated list of cases filed across the United States, updated with new cases and relevant decisions.

• COVID-19 Relief: Understanding SBA Loan Opportunities Under the CARES Act

  05.28/Alert

  Overview
  On May 27, 2020, the Internal Revenue Service issued Notice 2020-40 (“Notice”), which modifies certain rules related to the production tax credit (PTC) available pursuant to IRC Section 45 and the investment tax credit (ITC) available pursuant to IRC Section 48 in light of the COVID-19 pandemic.

• SBA Issues Long-Awaited Paycheck Protection Program Forgiveness Regulations

  05.26/Alert

  The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), enacted March 27, 2020, established the PPP and set aside $349 billion for small business loans. We summarized the Act’s small business loan provisions here. On April 24, 2020, the Paycheck Protection Program and Health Care Enhancement Act increased appropriations for the PPP by $310 billion. Perhaps the most notable facet of the PPP—and the reason that many thousands of companies applied for loans under it—was Congress’ promise to forgive loan amounts expended for up to eight weeks of permissible uses enumerated by the CARES Act.

• New York State Courts to Restore (Electronic) Filing of New Nonessential Actions

  05.22/Alert

  In our last alert, we noted that litigants had been banned from commencing new nonessential actions (including most commercial actions) in New York State courts since March 22, 2020. On that date, New York Chief Administrative Judge Lawrence K. Marks issued an administrative order (AO-78-20), prohibiting litigants from making any court filings (paper or electronic) in any non-essential matters, whether new or pending. While the Chief Administrative Judge loosened the restrictions on electronic filings in pending nonessential matters in Administrative Order 87-20, issued on May 1, 2020, the ban on the filing of new nonessential cases remained in place.

• Distressed Real Estate During COVID-19: New York State Court Order Finds UCC Foreclosures Are Not Suspended by New York E.O. 202.8.

  05.22/Alert

  A recent court order issued as part of an ongoing litigation involving a Manhattan hotel held that a mezzanine lender may proceed with a UCC foreclosure sale of the mezzanine loan collateral despite N.Y.E.O. 202.8, which prevents creditors from initiating judicial foreclosures. That clarification alone would have been enough to make the decision important during the COVID-19 pandemic but, in a few short pages, the order touches upon the appropriate remedies involving the foreclosure of an indirect ownership interest in real estate. The “secondary” implications from the order are likely to impact real estate lending even after N.Y.E.O. 202.8 has been lifted. Mezzanine lenders and borrowers should take note as they evaluate remedies under existing mezzanine loans.

• All Employers Must Monitor Employee COVID-19 Cases Under Updates to OSHA’s Interim Enforcement Plan and Guidance for Recording Cases

  05.20/Alert

  On May 19, 2020, the Occupational Safety and Health Administration (OSHA) of the U.S. Department of Labor issued both an Updated Interim Enforcement Plan and Revised Enforcement Guidance for Recording Cases, which will on May 26, 2020, rescind April 10 guidance issued on the respective topics.

• Implications of PPP Certifications for D&O Coverage

  05.18/Alert

  The Paycheck Protection Program (PPP), a key feature of the Coronavirus Aid, Relief and Economic Security Act (CARES Act), was enacted to provide forgivable loans to certain small business and self-employed individuals demonstrating urgent financial need in the wake of the COVID-19 pandemic. (See H.R. 748 § 1102.) Loan recipients must certify their compliance with the terms and conditions of the loan, and violations expose them to a wide array of potential civil and criminal penalties, forfeiture, and other liabilities. If you or your company have already obtained, or are considering applying for a PPP loan, it is highly advisable for you to carefully review your D&O Liability Insurance Policy, as coverages for defense or ultimate liability vary significantly.

• COVID-19: New York and New Jersey Announce Phased Reopening of Businesses

  05.18/Alert

  On Friday, May 15, New York began reopening businesses after widespread closures in response to the coronavirus pandemic. New York Forward, the New York plan to reopen the state, divides the state into ten (10) regions. Each region may reopen in a four-phased process as it satisfies certain metrics. Generally, the metrics monitor the region’s new infections and analyze the region’s health care, diagnostic testing, and contact tracing capacities.¹ The executive orders remain in effect, as described in this alert, requiring all people in New York to wear masks or face coverings in public, including when taking public or private transportation. As previously advised, employers will generally be expected to provide face masks to employees.(This link provides an updated map and table of each region’s status.)

• The Regulation of Medical Waste During COVID-19

  05.15/Alert

  After many used medical syringes washed up on beaches in the eastern United States, Congress enacted the Medical Waste Tracking Act of 1988, which directed EPA to establish a two-year medical waste demonstration project that would principally affect several northeastern states. The Act amended the Resource Conservation and Recovery Act (RCRA) and EPA promulgated medical waste standards in 1989. (See 54 FR 12326.) The rules were located in EPA’s solid, non-hazardous waste rules at 40 CFR Part 259 (later revoked). These rules followed the standard RCRA format and regulated Generators, Transporters, and Treatment and Disposal Facilities. When the initial batch of EPA’s RCRA Hazardous Waste Rules were promulgated in 1980, EPA decided against designating infectious waste as a hazardous waste. As a result, medical waste was not made subject to the rigorous RCRA regulatory regime. According to EPA, medical waste is a subset of solid wastes generated at health care facilities—principally hospitals—that may be contaminated by blood, bodily fluids or other potentially infectious materials and can take different forms.

• COVID-19’s Impact on the Motion Picture and Television Industries and How Insurance Can Soften the Blow

  05.13/Alert

  COVID-19 has left few industries unscathed. For those facing substantial financial damages, insurance policies may offer hope, and this is just as true for those losses being suffered in the entertainment industry as government orders have placed nearly all TV and film production in stasis because of the pandemic.

• SBA Issues Critical New Guidance on PPP Borrowers’ Certification of Necessity

  05.13Alert

  On April 24, 2020, President Trump signed into law the Paycheck Protection Program and Health Care Enhancement Act, whose provisions we summarized here. PPP applicants are required to make a number of certifications in connection with their applications, for example concerning their eligibility and the purposes for which they will use the loans. Attention to these certifications is extremely important, given the severe penalties that are possible for submitting false or misleading certifications to the government. One such certification that has drawn particular scrutiny is the certification that the “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”

• California Allows Localities to Reopen Certain Businesses Consistent with State Guidance

  05.12/Alert

  On Thursday, May 7, California rolled out a modified stay-home order and issued guidance to move into “Stage 2” of reopening certain sectors of the economy. This new statewide order, and the county-level reactions to it, create another layer in the patchwork of compliance requirements, but provide a pathway for certain industries to open doors sooner than others.

• COVID-19, Corruption and Money Laundering–Managing Risk and Avoiding the Coming Wave of Enforcement

  05.12/Alert

  The pandemic crisis gripping the world has dramatically expanded demand for medical, food, household and other supplies. Governments, international organizations, NGOs and private companies have unleashed a wave of spending. Sadly, corruption, fraud and money laundering thrive in such environments.

• Congress, Department of Justice Turn Their Attention to Oversight of COVID-19 Stimulus Funds

  05.08/Alert

  On May 5, the Department of Justice (DOJ) announced its first fraud and abuse indictments related to CARES Act lending. DOJ charged two men in Rhode Island with fraudulently seeking more than $500,000 in forgivable loans from the Small Business Administration (SBA) under the Paycheck Protection Program (PPP). The men allegedly sought funds for businesses that were not in operation prior to the COVID-19 pandemic in order to pay the salaries of employees that did not exist, while providing false documentation to support the application. DOJ charged the men with bank fraud, conspiracy to commit bank fraud, conspiracy to make false statements to influence the SBA, and aggravated identity theft. This is expected to be the first of many enforcement actions DOJ will launch against COVID-19 fraudsters.

• Mitigation of Investment Adviser Business Interruption and Regulatory Noncompliance Risks Related to COVID-19—Update

  05.07/Alert

  Investment advisers

  • Relief from the Form ID notarization process for certain filers. The SEC has adopted a temporary final rule to provide relief from the Form ID notarization process for certain filers where circumstances related to COVID-19 render it impracticable or impossible to obtain a notarization in a timely fashion. From March 26, 2020 through July 1, 2020, temporary paragraph (c) to Rule 10 of Regulation S-T under the Securities Act of 1933 will allow filers to gain access to the EDGAR system on a temporary basis without initially providing the required notarization to the manually signed document, provided that the filer indicates on the face of the signed document that it could not obtain the required notarization due to circumstances relating to COVID-19. Filers seeking access to EDGAR in reliance on the temporary final rule may be asked to provide documents, on a supplemental basis, to support their application and assist the staff in validating the request. Once the codes are issued, the filer may commence filing.

• SBA Extends PPP Safe Harbor to May 14

  05.06/Alert

  On April 24, 2020, President Trump signed into law the Paycheck Protection Program and Health Care Enhancement Act, whose provisions we summarized here. PPP applicants are required to make a number of certifications in connection with their applications, for example concerning their eligibility and the purposes for which they will use the loans. Attention to these certifications is extremely important, given the severe penalties that are possible for submitting false or misleading certifications to the government. One such certification that has drawn particular scrutiny is the certification that the “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Many applicants have noted that this certification is vague and have sought guidance on it.

• Florida’s “Step-by-Step” Plan to Reopening Businesses

  05.04/Alert

  Beginning on Monday May 4, 2020, at 12:01 a.m., Florida will begin reopening business in the Phase 1 of the recovery plan laid out by Gov. DeSantis. Businesses seeking to reopen will be subject to social distancing guidelines and CDC and OSHA requirements. Gov. DeSantis entered Executive Order 20-112 outlining the requirements for businesses looking to reopen. While this is a statewide order, Miami-Dade, Broward and Palm Beach counties will follow stricter protocols in coordination with their mayors and are excluded from this Executive Order. The remaining provisions of the Safer At Home executive order remains in place.

• Personal Guaranties May Not Deter Property Owner Bankruptcies

  05.01/Alert

  This is the fourth in a series of alerts on insolvency topics affecting real estate. In this alert, we evaluate whether the existence of personal guaranties are likely to deter property owner bankruptcies—a question raised during Pillsbury’s recent “Real Assets Roundup – Real Estate” webinar.

  In the wake of COVID-19, default rates for commercial real estate loans, including those supported by personal guaranties, will likely accelerate. Inevitably, borrowers will consider seeking bankruptcy protection to implement a restructuring of debt or a sale of real property collateral, and lenders should not assume that personal guaranties will prevent borrower bankruptcies. Given the current economic climate, lenders should instead assess the likelihood of their borrowers filing for bankruptcy and consider whether they are better off supporting a controlled bankruptcy process to accelerate favorable collateral disposition, as opposed to litigating on both the bankruptcy and guaranty fronts.

• Texas Governor Releases Plan to Reopen the State

  05.01/Alert

  On April 27, 2020, Governor Greg Abbott released Texas’s long-term plan to open the state for business, while still containing the spread of COVID-19. The plan consists of two key components: Executive Order GA-18 (Order), which designates the businesses currently permitted to reopen, and the Governor’s Report to Open Texas (Report), which outlines Texas’s increased testing efforts, contact tracing program, and other safety measures, and provides checklists for individuals and all employers, as well as retailers, restaurants and movie theaters.

• COVID-19 Data Privacy Risks from Return to Work and Geolocation Tracing

  04.28/Alert

  As some countries and U.S. states start to lift COVID-19 shutdown restrictions, businesses with staff now able to return to factories and offices need to watch out for unwittingly exposing themselves to fines for breaches of data laws while trying to comply with government guidelines on social distancing and other pandemic-related regulations and guidelines.

• U.S. Subsidiaries of Foreign Companies Can Also Benefit from the CARES Act

  04.27/Alert

  As reported in our March 30 alert, the United States Coronavirus Aid, Relief, and Economic Security Act, or CARES Act (H.R. 748) became effective on March 27, 2020. The CARES Act is intended to provide financial assistance to companies hit by the COVID-19 pandemic.

• SBA Imposes New PPP Certification Requirement, Provides May 7 Safe Harbor

  04.27/Alert

  On April 24, 2020, President Trump signed into law the Paycheck Protection Program and Health Care Enhancement Act, whose provisions we summarized here. In relevant part, this Act increases by $310 billion the funds appropriated for the PPP established on March 27, 2020, by the CARES Act, whose provisions we summarized here. The SBA has announced that new loans under this second tranche of PPP appropriations will commence April 27, 2020. As the PPP has evolved since its inception on March 27, so too have SBA and Treasury’s articulation of its requirements. One of the agencies’ primary mechanisms for conveying these requirements to borrowers has been through a regularly updated list of Frequently Asked Questions, many of which the SBA then formalizes through interim final rules that it publishes in the Federal Register.

• How Chapter 11 Solved One Multifamily Condo Regime’s Dual Challenges of Mounting Liabilities and Unpaid Dues

  04.24/Alert

  With many struggling to make housing payments due to COVID-19, dues owed to multifamily condominium associations are likely to go unpaid—especially if homeowners feel deprived of the use of common areas, such as pools, gyms and playgrounds. Associations with significant reserves may be able to weather this storm, but for associations that were already struggling, the future may look less promising. Advance consideration of options and planning may help avoid a worst-case scenario and maximize value for associations and their unit owners.

• President Trump Signs 4th Stimulus Bill

  04.24/Alert

  On April 24, 2020, President Trump signed into law the Paycheck Protection Program and Health Care Enhancement Act. This is the fourth piece of legislation approved by the President and Congress since March 1 to address the COVID-19 pandemic and associated economic fallout. Most notably, the Act provides critical new funding for the Small Business Administration’s (SBA) Paycheck Protection Program (PPP), which exhausted its original CARES Act appropriation within days of program implementation.

• Federal Reserve Expands Size and Scope of Primary Market Corporate Credit Facilities (PMCCF) and the Secondary Market Corporate Credit Facilities (SMCCF)

  04.23/Alert

  On April 9, 2020, the Federal Reserve announced additional programs under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which provides up to $2.3 trillion in loans and other investments to support the U.S. economy. A key component of the relief package is an expansion in the size of the Primary Market Corporate Credit Facility (PMCCF) and the Secondary Market Corporate Credit Facility (SMCCF), significantly upsizing the funds available under both programs from those initially announced on March 23, 2020. The Federal Reserve also published term sheets for each of the programs.

• Understanding PREP Act Liability Protections in the Fight Against COVID-19

  04.22/Alert

  Enacted in 2005, the Public Readiness and Emergency Preparedness (PREP) Act authorizes the Secretary of Health and Human Services (HHS) to limit legal liability for those who administer “countermeasures” during a declared public health emergency. The purpose of the Act is to encourage the quick and efficient development and deployment of countermeasures—like equipment, diagnostics, treatments, and vaccines—during a public health crisis, like the current COVID-19 pandemic.

• The District Extends Stay-at-Home Order and Expands COVID-19 Restrictions

  04.22/Alert

  Washington, DC Mayor Muriel Bowser has implemented additional restrictions in the District to combat the spread of COVID-19. Mayor’s Order 2020-058, issued April 8, 2020, adds further social distancing requirements for retail food sellers and farmer’s and fish markets. Mayor’s Order 2020-063, issued April 15, 2020, extends the previous public emergency and public health emergency orders through May 15, 2020, implements additional protocols for group facilities, and adds face covering requirements.

• CISA Releases New Guidance for Essential Critical Infrastructure

  04.22/Alert

  On April 17, 2020, the Cybersecurity and Infrastructure Security Agency (CISA) rolled out its third installment of the Essential Critical Infrastructure Workers guidance ( Guidance). This Guidance amends prior versions released on March 19 and March 28. Our redline identifying the differences can be found here.

• Department of Education Makes Available Institutional Portion of Grants Awarded under CARES Act

  04.22/Alert

  As previously noted, the Coronavirus Aid, Relief, and Economic Security Act, Pub. L. No. 116-136, (CARES Act), which was signed into law on March 27, 2020, includes approximately $14 billion in stimulus funds for higher education. Approximately $12.6 billion are allocated to IHEs according to a formula based on student enrollment (Formula Grants). See CARES Act, § 18004(a)(1). On April 9, 2020, ED made available to IHEs half of the Formula Grants to be used for emergency financial aid to students (more information here).

• COVID-19 and the Migration to SAP S/4 HANA

  04.21/Alert

  In October 2014, SAP announced that it would discontinue mainstream maintenance on its Business Suite 7 software at the end of 2025. This deadline forces SAP customers that wish to remain on a supported version of SAP ERP to migrate to S/4 HANA. S/4 HANA is SAP’s new generation of ERP software that consists of SAP’s core product set and an in-memory database solution.

• Practical Considerations for Navigating UK Company Law Matters during COVID-19

  04.21/Alert

  The social distancing measures implemented by the government in response to the COVID-19 pandemic have prompted many businesses to adapt their daily practices and governance at relatively short notice. This briefing considers some practical and logistical considerations that can assist companies and their directors and officers in navigating the management of the business during this rapidly evolving period.

• Nationwide Trend: Workers Must Cover Up at Employers’ Expense

  04.21/Alert

  On April 3, 2020, the Centers for Disease Control and Prevention (CDC) recommended that all individuals wear cloth face masks in public, and where social distancing measures are difficult to maintain. The CDC advises that use of cloth face masks will slow the spread of the virus and help prevent asymptomatic and pre-symptomatic individuals with COVID-19 infections from transmitting the virus to others. Across the United States, an increasing list of governors and mayors are making that recommendation into a requirement.

• Federal Reserve Establishes New Term Asset-Backed Securities Loan Facility

  04.21/Alert

  On March 23, the Federal Reserve announced a series of efforts to address ongoing financial uncertainty in the face of COVID-19. One such effort is the establishment of the new Term Asset-Backed Securities Loan Facility (the TALF) authorized by Section 13(3) of the Federal Reserve Act. The facility is designed to support the flow of credit to consumers and businesses through securitization. The TALF will enable the issuance of asset-backed securities (ABS), including securities backed by student loans, auto loans, credit card loans, loans guaranteed by the Small Business Administration and other eligible assets.

• Maryland Now Requires the Use of Face Coverings and Physical Distancing Measures at Retail Establishments

  04.20/Alert

  On April 15, 2020, Maryland Governor Larry Hogan issued Order No. 20-04-15-01 requiring the use of face coverings when on public transportation or inside of retail or foodservice establishments. The order also requires that retail establishments implement certain physical distancing and public health measures to the extent possible. While the order is effective immediately, the face covering requirement goes into effect at 7:00 a.m. on April 18, 2020. As with prior orders, failure to comply constitutes a misdemeanor subject to imprisonment (not exceeding one year), or fines (not exceeding $5,000), or both.

• Commercial Construction during COVID-19: CISA Expands its Guidance

  04.20/Alert

  As noted in Construction During COVID-19: Is It Essential?, CISA issued an advisory memorandum and guidance on what services should be considered as a part of the “Essential Critical Infrastructure Workforce.” CISA’s purpose in issuing the guidance was to “help state and local officials as they work to protect their communities, while ensuring continuity of functions critical to public health and safety, as well as economic and national security.” Because many states reference or incorporate the CISA guidance into their own state executive orders and directives, it is important to stay up to date on provisions relating to construction. Moreover, some states incorporate a specific version of the CISA guidance and may continue to rely on older versions of the guidance until adopting the later guidance. (For example, in Indiana, Executive Order 20-08 initially ordered the closure of non-essential businesses and referenced the original CISA guidance. Executive Order 20-18 superseded Order 20-08 and, among other things, referenced the CISA guidance that was updated on March 28. In contrast, Florida’s Executive Order Number 20-91 attaches CISA Guidance 2.0 but specifically incorporates “and any subsequent lists published” by CISA.)

• CARES Act Expands Eligibility Under the Small Business Reorganization Act: What Distressed Small Businesses and Their Creditors Should Know

  04.20/Alert

  The Small Business Reorganization Act of 2019, which created Subchapter V of chapter 11 of the Bankruptcy Code, became effective on February 19, 2020 (11 U.S.C. §§ 1181-1195 “Subchapter V”). Subchapter V was intended to mitigate perceived challenges faced by small business debtors, with no more than $2,725,625 in debt, in traditional chapter 11 cases. In response to the COVID-19 crisis, the CARES Act expands Subchapter V eligibility for a period of one year (or longer if extended by Congress) by increasing the cap to $7,500,000 in aggregate secured and unsecured non-contingent and liquidated debt. Widespread distress and decreased asset values along with the subchapter’s debtor-friendly rules likely will make Subchapter V an even more attractive option for larger than originally-contemplated businesses who seek to benefit from its short timeline (debtors must file plans of reorganization within 90 days), its reduced administrative expense (there is no disclosure statement to prepare and pay for, no creditors’ committee to fund, and no administrative fees to be paid to the United States Trustee), and its elimination of the “absolute priority” rule (owners can retain their equity in a Subchapter V small business over the objection of a class of unsecured creditors, without paying those creditors in full).

• Navigating Bankruptcy Exposure for Landlords Arising from Anticipated Lease Terminations During COVID-19

  04.17/Alert

  With an unprecedented number of commercial real estate tenants not paying rent and potentially defaulting under their leases, many landlords and tenants may soon be entering into forbearance agreements that defer payment of rent and other financial obligations. The longer the COVID-19 crisis continues without tenants generating revenue due to business interruption and with rent and other expenses accruing, the more difficult it will be for tenants to restart their businesses and pay months of accumulated liabilities. Eventually, the focus for some landlords will shift from rent deferral to lease terminations. This alert identifies a potential, but very real, unintended consequence for landlords if the tenant files for bankruptcy after a lease termination, and offers potential solutions, recognizing that a one-size-fits all remedy does not exist.

• Distressed Real Estate during the Coronavirus Pandemic: Conducting a Mezzanine Loan Foreclosure Under the UCC

  04.17/Alert

  Many leveraged real estate projects are under increased strain due to the economic fallout from the coronavirus pandemic. For mezzanine lenders—including the mezzanine lender who is no longer willing to forbear or the mezzanine lender who has always had a “loan to own” view of its mezzanine loan—this circumstance may mean pursuing remedies under the UCC. While there are differences in states’ enactments of and case law interpreting the UCC (and other laws that may supplement or supplant the UCC), the following general principles apply to an exercise of remedies under the UCC.

• OSHA’s Interim Enforcement Plan for COVID-19

  04.17/Alert

  Although the Occupational Safety and Health Administration (OSHA) issued “Guidance on Preparing Workplaces for COVID-19” on March 9, 2020, critics noted the guidance is “advisory in nature” and does not create “new legal obligations.” After issuing four memoranda specific to respiratory protection and the N95 facepiece, OSHA is now turning its attention to enforcement in a response plan designed to address reports of COVID-19-related workplace hazards.

• Texas Restricts Evictions Due to COVID-19: Landlord Considerations

  04.16/Alert

  On April 6, in response to the COVID-19 pandemic, the Texas Supreme Court issued Emergency Order 9, which extends its previous Emergency Order 4 prohibiting any trial, hearing or other proceeding in an eviction to recover possession of residential property under Chapter 24 of the Property Code and Rule 510 of the Texas Rules of Civil Procedure until after April 30, 2020.

• Despite COVID-19 Challenges, No Extension of Form CRS Compliance Date for Investment Advisers

  04.15/Alert

  In an effort to provide retail investors clarity regarding their relationships with their investment advisers and the supervised persons of those investment advisers, the Securities and Exchange Commission (SEC) adopted new rules which require investment advisers that are registered with the SEC to provide a relationship summary pursuant to Form CRS and rule 204-5 under the Investment Advisers Act of 1940, if they have retail investors. A retail investor is a natural person, or the legal representative of such natural person, who receives or seeks to receive investment advisory services primarily for personal, family or household purposes. Investment advisers’ relationship summaries are required to be filed electronically through the Investment Adviser Registration Depository (IARD), posted on the advisers’ websites (where such websites exist) and delivered to the advisers’ retail investors. A new part 3 of Form ADV describes the requirements of the relationship summary. For additional information regarding Form CRS and related requirements see the SEC’s final rule.

• New CDC Interim Guidance for Essential Employees

  04.15/Alert

  While most of the country continues under “stay at home” orders, “essential” or “critical infrastructure” employees remain exempted. Yet, as outbreaks of COVID-19 are occurring throughout the country, “essential” businesses are not immune to infection, presenting risks for the workforce and the continuity of these businesses. Indeed, media reports have highlighted several “essential” businesses with outbreaks, resulting in large numbers of critical employees being absent in some areas, such as law enforcement and health care, and shutdowns of essential production, manufacturing and food supply operations. The CDC’s new interim guidance means to respond by providing updated protocols for “essential” businesses needing to ensure a sufficient workforce while better managing risks to employees and people interfacing with essential personnel. As discussions begin across the country about the lifting or modifying of stay-home orders, businesses should look to these guidelines as minimum standards to begin preparing their workplaces for a new normal.

• Protecting Shareholder Rights During the COVID 19 Pandemic

  04.14/Alert

  Many companies have been hit hard by the coronavirus pandemic and the ensuing quarantines and social distancing, especially those operating in the real estate, hotel, airline, retail, restaurant, and oil & gas industries. Investor uncertainty regarding the impact and duration of the current pandemic has led to extreme market volatility, resulting in current trading prices for many companies that do not reflect their long-term values. This can make companies potentially vulnerable to coercive or abusive takeover tactics or activism by those seeking to acquire significant share positions at currently depressed prices, and who may not have long-term stockholder value as their primary goal. Companies whose stock has been negatively impacted by the recent market volatility should consider preparing rights plan materials and either adopting or placing them “on the shelf” for future implementation on very short notice if the need arises.

• National Landscape of COVID-19 Eviction and Foreclosure Moratoriums Continues to Shift

  04.14/Alert

  As the COVID-19 pandemic continues to halt daily life across the United States, orders limiting various real estate remedies have been issued by leaders at every level of government. Some governors, such as California Governor Gavin Newsom and New York Governor Andrew Cuomo, have ordered statewide moratoriums on certain evictions for the pendency of the state of emergency. Other states’ courts, such as Texas and South Carolina, have halted any judicial foreclosure and eviction proceedings statewide. These orders vary in which types of tenants are protected, from covering residential, commercial and industrial tenants, to only residential tenants whose non-payment of rent is due to lost income resulting from the COVID-19 pandemic. Many counties and cities have also issued their own moratoriums, adding to the uncertainty of what protections there are in place fortenants and borrowers. Finally, many of these moratoriums are operating on uncertain timelines, expiring in 30 days or lasting the pendency of a separate state of emergency declaration.

• Technology is Not Immune to COVID-19 Cyber Fraud

  04.14/Alert

  Crisis fuels crime: in this case, cybercrime. The coronavirus (COVID-19) global pandemic has created a virtual environment ripe for cyber fraud. Social distancing means an exponential rise in the use of technology for work, education, and leisure. Further, decreased human contact reduces the effectiveness of normal mechanisms of confirming that electronic requests are legitimate. In response, U.S. and international agencies have issued a slew of warnings about governmental impersonators using the pandemic to steal money and personal information or to distribute malware. As of the date of this article, current guidance on the most prevalent cyber threats and mitigation strategies is summarized below.

• Distressed Real Estate During the Coronavirus Pandemic: Tips for Negotiating Forbearance Agreements

  04.13/Alert

  The coronavirus pandemic, stay-at-home orders and social distancing have put unprecedented strains on borrowers—hotels are closed or barely operational, retail properties are shuttered, tenants are not paying rents (and, in many jurisdictions, shielded from eviction)—yet owners must continue to meet their debt service payment (and other) obligations and fund their required reserves. In addition, the impact of Covid-19 on property valuations will likely result in borrowers failing to meet debt service, debt yield, loan-to-value or similar financial covenants.

• Fraud and the Risk of FCA Litigation in the Time of COVID-19

  04.13/Alert

  The FCA Remains the Most Powerful Anti-Fraud Tool in the Government’s Arsenal
  The most potent weapon in combatting corporate fraud against the U.S. government has been the False Claims Act (FCA), 31 U.S.C. §§ 3729-3733. That fraud most often involves false statements and false or fraudulent claims for payment from the government (31 U.S.C. § 3729(a)(1)). There is also a “reverse false claims act” provision, which imposes liability for improper conduct aimed at avoiding paying the government or improper retention of an overpayment by the government (31 U.S.C. § 3729(a)(1)(G)). Since 1987 the government has recovered over $59 billion, with $3 billion being recovered in 2019.

• Treasury and Fed launch $600 Billion Main Street Lending Program

  04.10/Alert

  As part of the $2.2 trillion CARES Act, today the Treasury Department and Federal Reserve announced two new lending programs—the Main Street Business Lending Program and the Municipal Liquidity Facility—as well as additional investment in and expansion of three emergency lending programs created by the Federal Reserve late last month. Interested parties have been invited to provide comments on the programs before officially launched sometime next week.

• Face Masks Now Mandatory in Los Angeles

  04.09/Alert

  On April 7, the City of Los Angeles issued a Worker Protection Order (WPO) as a follow-up to the city’s March 19 Safer at Home Order. Based on the outsized risk of exposure to the COVID-19 virus faced by many workers of essential businesses, the WPO states that each employee of the following types of essential businesses must wear a face mask or face covering:

• FCC Moves Forward with COVID-19 Telehealth Program

  04.09/Alert

  On April 2, 2020, the FCC established the COVID-19 Telehealth Program, which will guide the disbursement of $200 million to health care providers for connected care services to their patients. We published our summary of the Program on April 3, 2020. As discussed in our summary, the FCC delegated to its staff the development of the procedures to disburse the funds.

• COVID-19 Relief: SBA Issues Regulations & Guidance on the Payroll Protection Program

  04.09/Alert

  The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), passed on March 27, 2020, sets aside $349 billion for Paycheck Protection Loans, which are available through banks, credit unions and other lenders (and guaranteed by the government) and allows for forgiveness of certain amounts. We summarized the Act’s small business loan provisions here; and what funds, corporate investors and their portfolio companies should know about eligibility for the payroll protection program here.

• CARES Act and FFCRA Revenue Stream Options for Nonprofit Organizations

  04.09/Alert

  Nonprofit organizations have avenues to obtain significant financial relief under the provisions of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), a $2.2 trillion stimulus package enacted on March 27, 2020, designed to address the widespread economic disruptions caused by the COVID-19 pandemic. Many nonprofit organizations are facing acute financial strain as they work to navigate the unprecedent challenges posed by the pandemic. In addition, many nonprofit organizations will need to comply with the requirements of the Family First Coronavirus Response Act (FFCRA), which provides paid leave administered by employers but funded by the federal government. Nonprofit organizations should review their eligibility for three key CARES Act provisions and the FFCRA.

• A Single Asset Bankruptcy from the 1990s Gains New Relevance during COVID-19

  04.07/Alert

  This is the first in a series of alerts on insolvency topics affecting single asset and other real estate projects. We have selected the present topic because it may provide lessons for real estate projects with no or severely reduced cash flow (a condition many projects find or will find themselves in due to the impact of COVID-19). Single asset real estate debtors have always confronted unique challenges in chapter 11, and those challenges increased when Congress imposed the requirement (with limited statutory exceptions) that the debtor, within 90 days of the order for relief, either commence interest payments or file a plan reasonably susceptible to confirmation. We will examine the nuances of these provisions and other challenges confronting debtors and lenders, in future alerts.

• Distressed Real Estate During the Pandemic: The Importance of Pre-Negotiation Agreements for Borrowers and Lenders

  04.08/Alert

  Many industries, including the real estate, hotel, airline, retail, restaurant and oil & gas industries have been especially hard hit (some indeed devastated) by the coronavirus pandemic, the ensuing quarantines and social distancing. Projects that were already troubled may be “pushed to the edge”—many real assets and borrowers will need “breathing room” so that they can withstand this dramatic downturn and potentially be in a position to “restart” when the economy “restarts.”

• Stay at Home, Louisiana: Certain Nonessential Businesses Temporarily Closed

  04.08/Alert

  Performing an “Essential Activity”
  Following an earlier declaration of a statewide public health of emergency and subsequent additional measures, on March 22, 2020, Louisiana Governor John Bel Edwards issued a Stay-at-Home Order instructing all Louisiana residents to shelter at home unless they are performing an “essential activity.” On April 2, 2020, Governor Edwards extended his Order until April 30, 2020. Under the Order, all nonessential businesses are temporarily closed.

• Alabama Issues Statewide Stay-at-Home Order

  04.07/Alert

  Following declarations of emergency and actions in the counties surrounding Birmingham, the Alabama State Health Officer determined that further social distancing measures are necessary on a statewide basis to prevent the spread of COVID-19. On April 3, 2020, Dr. Scott Harris amended prior orders (which had suspended certain public gatherings statewide) to direct its residents to shelter in place.

• CARES Act Planning Opportunities for Retirement Accounts and Charitable Giving

  04.07/Alert

  The “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act) was signed into law on March 27, 2020. Included in the $2.2 trillion dollar stimulus package are provisions changing the rules for retirement plans. Other provisions encourage charitable giving by allowing taxpayers to deduct up to 100 percent of their adjusted gross income for cash contributions to qualified charities. These changes present unique planning opportunities which can result in substantial tax savings. Discussed below are some of these opportunities.

• The Treasury Loan Window Is Opening: Are You Ready?

  04.07/Alert

  As reported in our March 30 alert, the CARES Act (H.R. 748) was signed into law on March 27, 2020. The Acts appropriates $500 billion to aid mid-sized and large businesses, the aviation industry, and businesses “critical to maintaining national security.” The Treasury Department has already released guidance on how the aviation industry and businesses “critical to maintaining national security” can seek payroll grants and operating loans, worth up to $46 billion. These guidelines are instructive as mid-sized and large businesses and nonprofits begin to prepare for their chance at the Treasury window.

• Texas: State and Local COVID-19 Social Distancing Measures

  04.07/Alert

  The COVID-19 pandemic has proved that, in Texas, the “roving, roiling debate over local control of public affairs has not, with increased age, lost any of its vigor.” City of Laredo v. Laredo Merchants Assoc., 550 S.W.3d 586, 588 (Tex. 2018). Although the majority of states across the country have issued statewide Shelter-in-Place or Stay-Home orders, Texas has demurred, initially altogether, deferring to counties and cities to use their own executive authorities as they deemed necessary, and then coming along in substance while eschewing the “stay-home order” characterization.

• IRS Issues FAQs and Form 7200 for Advance Payment of COVID-19 Employer Tax Credits

  04.07/Alert

  As noted in Pillsbury’s Client Alerts issued on March 18, 2020, March 25, 2020 and March 27, 2020, the federal Families First Corona Relief Act (the FFCRA) requires that certain private employers with fewer than 500 employees provide up to 80 hours of additional paid sick leave to employees who are unable to work due to isolation or quarantine orders or advisories, or because they must care for a child due to COVID-19 precautions. The FFCRA also requires employers with fewer than 500 employees to provide up to an additional ten weeks of paid family and medical leave to care for a child whose school or childcare provider is closed due to COVID-19 related concerns.

• COVID-19: DOL Issues Temporary Final Rule on Expanded Paid Sick and Family Leave Entitlements

  04.07/Alert

  As one of the first emergency legislative efforts to combat COVID-19, the FFCRA raised many questions when it was first introduced in mid-March 2020 (as summarized in Pillsbury’s March 18, 2020 client alert). Prior to its April 1, 2020 effective date, the DOL addressed some uncertainties by publishing answers to various FAQs, which continue to be updated regularly. On April 1, 2020, the DOL published 124 pages of Final Temporary Regulations, providing additional guidance for employers regarding the FFCRA. These regulations provide answers to many outstanding questions and, in some instances, contradict prior guidance. (State and local regulations may provide employee protections and employer obligations that differ from, and are in addition to, FFCRA entitlements. Please consult with counsel to confirm whether any state or local statutes or regulations impose additional or different obligations than those discussed here.)

• Michigan Issues Stronger Stay-Home Order to Protect Public Health

  04.07/Alert

  On Friday April 3, 2020, Michigan Governor Gretchen Whitmer issued Executive Order 2020-36, strengthening her previous “stay home, stay safe” order to protect workers who stay home due to COVID-19 symptoms, effective immediately.

• COVID-19: Tennessee Becomes Latest State to Issue Stay-Home Order

  04.06/Alert

  In response to the outbreak of COVID-19, Tennessee Governor Bill Lee issued a stay-home order on Thursday evening. The order amends earlier executive orders that had enacted less strict restrictions on travel in Tennessee.

• Zone of Uncertainty: Director Considerations in Responding to COVID-19

  04.06/Alert

  Boards of directors face the challenging task of managing the impact of the COVID-19 pandemic on the business, be it from reduced demand, supply chain or operational interruptions, employee issues, or liquidity constraints.

• Texas Environmental Compliance During the COVID-19 Pandemic

  04.06/Alert

  The swift onslaught of the COVID-19 virus has presented serious challenges to the regulated community’s ability to maintain standard compliance protocols. Environmental agencies, which are also struggling with workforce impacts of their own, are responding with updated compliance and enforcement policies meant to provide some measure of relief, without relaxing substantive obligations.

• Governor DeSantis issues “Safer at Home” Order until April 30, 2020

  04.03/Alert

  On April 1, 2020, Governor Ron DeSantis mandated the closure of all nonessential businesses by Executive Order 20-91, effective April 3, 2020, at 12:01 am and expiring on April 30, 2020, unless extended by subsequent order. The order also requires anyone in Florida to limit their movement and personal interactions outside of the home to “essential services” and “essential activities.” The Order also mandates that senior citizens and Floridians with significant underlying medical conditions (chronic lung disease, moderate to severe asthma, serious heart conditions, immunocompromised status, cancer, diabetes, severe obesity, renal failure, and liver disease) “shall stay at home and take all measures to limit the risk of exposure to COVID-19.”

• Health Care Providers Should Prepare for $100 Billion Reimbursement

  04.02/Alert

  The Coronavirus Aid, Relief, and Economic Security (CARES) Act appropriates an additional $100 billion to the “Public Health and Social Services Emergency Fund” to reimburse “eligible health care providers” for COVID-19 related health care expenses or lost revenues. The Act gives the Secretary of Health and Human Services (HHS) broad discretion in distributing these funds as efficiently as possible. The Secretary has yet to publish guidance as to how funds will be administered, so we will be following developments closely as they occur. Below are the key concepts for those interested in pursuing these funds.

• COVID-19 Impacts on REITs and Mitigation Strategies

  04.01/Alert

  Investing Debt Proceeds
  With the sudden shutdown of REIT business tenants from COVID-19 and the potential impact on REIT landlords, REITs have sought large infusions of cash for liquidity. A REIT borrowing a large amount of cash may want to invest that cash in short-term income-producing investments. However, the REIT must be conscious of the quarterly REIT asset tests if it intends to place borrowed cash in anything other than bank demand deposit accounts. The 75% asset test under federal income tax law (the Code) generally requires that, as of the close of each quarter of the taxable year, at least 75% of the value of the REIT’s assets must consist of real estate assets, cash, cash items (including receivables), and U.S. government issued or guaranteed securities (collectively, “good” assets). Other financial instruments are generally treated as “securities” and would not be treated as “good” assets for this 75% asset test, and a REIT’s holdings in such assets are limited under several other asset tests.

• COVID-19 Relief: What Funds, Corporate Investors and Their Portfolio Companies Should Know About Eligibility for the Payroll Protection Program Under the CARES Act

  04.01/Alert

  The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), passed on March 27, 2020, sets aside $349 billion for Paycheck Protection Loans, which are available through banks, credit unions and other lenders (and guaranteed by the Government) and allows for forgiveness of certain amounts. The authority to make and approve loans under the programs is to be delegated by the SBA to participating lenders. (We summarized the Act’s small business loan provisions here.) Loans under the Paycheck Protection Program are available through June 30, 2020, and expanded Economic Injury Disaster Loans are available through December 31, 2020.

• California Eases Strict Statutory Compliance in Face of COVID-19

  04.01/Alert

  Governor Newsom issued an Executive Order this weeks that augments the existing California stay-at-home order, EO N-33-20, to provide administrative relief to governmental agencies as well as the business sector whose compliance with certain laws and regulations is likely to be adversely impacted by COVID-19.

• Closing the Capitol: Mayor Bowser Issues Stay-at-Home Order

  04.01/Alert

  Following a growing list of states and municipalities, on March 30, 2020, Washington, DC, Mayor Muriel Bowser issued an order to all individuals living in Washington, DC, to stay at home except to perform “essential activities.” Order 2020-54 is effective from 12:01 am on April 1, 2020, until April 24, 2020, unless extended, rescinded, superseded or amended by a subsequent order.

• Virginia Ordered to Stay at Home Until June 10th

  04.01/Alert

  In response to the rise in COVID-19 cases both nationwide and in the Washington, DC, region, Virginia Governor Ralph Northam issued a statewide order for residents to stay at home except in very limited circumstances. Executive Order No. 55 is effective immediately and remains in place until June 10, 2020, unless amended or rescinded by another executive order.

• COVID-19: Due Diligence Considerations for Underwriters in Securities Offerings

  03.31/Alert

  In the wake of COVID-19, underwriters should be vigilant when conducting due diligence on an issuer intending to engage in a securities offering. The issuer could be facing work-stoppages, supply-chain disruptions, reduced demand for products and services, securities portfolio devaluations, impairments, or a host of other concerning developments, any of which could be material to the issuer’s business, financial condition or results of operations. Underwriters should seek to understand all material impacts of COVID-19 on the issuer to ensure that such matters have been properly disclosed to investors prior to any underwritten offering. These matters can be explored, among other ways, in due diligence sessions with the issuer’s management.

• Mitigation of Investment Adviser Business Interruption and Regulatory Non-Compliance Risks Related to COVID-19

  03/31/2020

  We recommend the following specific measures to mitigate risks of business interruption and regulatory noncompliance resulting from the COVID-19 pandemic.

• So the Government Shut Down Your Construction Project—What Next?

  03.31/Alert

  Last Friday, New York issued updated guidance that halted all construction in the state, except for “essential construction” which consists of roads, bridges, transit facilities, utilities, hospitals or health care facilities, affordable housing, and homeless shelters. As a result, most commercial construction and condominium projects are now on hold, with the exception of work that must be completed for safety purposes and emergency work. The New York guidance is a drastic departure from the state’s previous guidance, which generally exempted construction as an essential service. The Empire State Development’s website provides further detail as to what constitutes essential health care operations and infrastructure.

• New $500 Billion Treasury Loan Programs Under the CARES Act Provide COVID-19 Relief for Private Sector Business

  03.30/Alert

  The CARES Act (H.R. 748) was signed into law on March 27, 2020. In a Client Alert issued that day, we summarized the Act’s provisions in Title I relating to its appropriation of $350 billion for small business loans.

• COVID-19 Relief: Understanding SBA Loan Opportunities Under the CARES Act

  03.27/Alert

  On March 11, 2020, President Trump announced in a national address that the SBA would be making $50 billion in low-interest loans available to small businesses impacted by the COVID-19 pandemic. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) greatly exceeds the President’s initial pledge by appropriating $350 billion for “Paycheck Protection Loans” for small businesses—including up to $10 million per company for companies with fewer than 500 employees. The Act also makes $10 billion available to the SBA’s existing Economic Injury Disaster Loans for companies impacted by COVID-19, and modifies the rules for those loans is several ways. At the time of this publication, the CARES Act (H.R. 748) has been passed by both chambers of Congress and is expected to be signed by President Trump on March 27, 2020. We summarize below the Act’s major provisions related to these two types of SBA loan opportunities.

• New Coronavirus Legislation Fixes Real Estate Glitch from 2017 Tax Act

  03.26/Alert

  On March 25, the Senate passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), a third legislative attempt to address the economic effects of the COVID-19 pandemic. The House is expected to take up the legislation on Friday, March 27. Included in the CARES Act is a retroactive amendment to the bonus depreciation rules, which should now finally allow taxpayers to claim 100% bonus depreciation for “qualified improvement property.”

• New York Regulation Defines Required Mortgage Forbearance and Bank Fee Waivers for COVID-19 Financial Hardship

  03.26/Alert

  With the spread of the novel coronavirus (COVID-19) throughout the country, as described in earlier client communications, federal and state officials at every level are issuing guidance and directives advising financial institutions on how to handle situations in which the pandemic prevents individuals from repaying loans. New York Governor Andrew Cuomo issued Executive Order No. 202.9 (EO 202.9), dated March 21, 2020, containing a broad requirement for forbearance and relief from banking fees for those experiencing financial hardship as a result of COVID-19. EO 202.9 is operative until April 20, 2020. EO 202.9 has been implemented in an Emergency Regulation issued by NYSDFS on March 24, 2020, Emergency Relief for New Yorkers Who Can Demonstrate Financial Hardship as a Result of COVID-19, 119 NYCRR 3 (the DFS Regulation). The DFS Regulation applies to “Regulated Institutions,” defined as “any New York regulated banking organization under New York Banking Law and any New York regulated mortgage servicer entity subject to the authority of the Department.”

• New Jersey State and Local COVID-19 Orders

  03.25/Alert

  One of New Jersey’s most well-known sons, Frank Sinatra, famously proclaimed, “I did it my way.” In response to the grave threat COVID-19 presents to life and health, Governor Phil Murphy has taken steps to insure that, for the time being, localities in New Jersey cannot follow in Ol’ Blue-Eyes’ footsteps.

• Stay at Home Massachusetts: Nonessential Services Closed

  03.25/Alert

  Following his earlier declaration of a state of emergency, on March 23, 2020, Massachusetts Governor Charlie Baker issued an emergency order instructing all businesses and organizations in the Commonwealth that do not provide “COVID-19 Essential Services” to close their physical locations. The emergency closure went into effect at 12:00pm on March 24, 2020 and remains in place until 12:00pm on April 7, 2020. To slow the alarming spread of the novel Coronavirus (COVID-19), Order No. 13 further restricts movement within the community by prohibiting indoor gatherings of more than ten people. In tandem, Governor Baker also directed the Department of Public Health (DPH) to issue a “stay-at-home” advisory.

• Maryland Extends COVID-19 Closures to Nonessential Businesses

  03.25/Alert

  On March 23, 2020, Maryland Governor Larry Hogan mandated the closure of all nonessential businesses by executive order effective as of March 23, 2020 at 5 p.m. A person who knowingly or willfully violates the order may be subject to imprisonment of up to one year or a fine of up to $5,000, or both. As with the governor’s prior executive orders prohibiting large gatherings and directing business closures in response to COVID-19, the March 23 order suspends any statute, rule, or regulation of a state agency or political subdivision that is inconsistent with the order.

• U.S. Merger Review in the Time of Coronavirus

  03.24/Alert

  Both U.S. antitrust enforcement agencies—the Federal Trade Commission (FTC) and the Department of Justice Antitrust Division (DOJ)—are changing their approach to civil enforcement and merger review during the coronavirus pandemic.

• New York Bankers Must Consider Forbearance, Other Consumer Protection in Response to COVID-19

  03.23/Alert

  With the spread of the novel coronavirus (COVID-19) throughout the country, New York Governor Andrew Cuomo issued Executive Order No. 202.9 (“EO 202.9”), dated March 21, 2020, containing a broad requirement for forbearance and relief from banking fees for those experiencing financial hardship as a result of COVID-19. EO 202.9 is operative until April 20, 2020.

• COVID-19 Pandemic Will Soon be Impacting Compliance with and Enforcement of Environmental Laws

  03.23/Alert

  Remote work and other impacts to company workforces from the novel coronavirus pandemic are likely to result in practical limitations on usual environmental, health and safety compliance programs and activities across a wide variety of industries. We are already seeing see some regulatory agencies issuing new guidance and orders with implications for compliance and enforcement, and it is worth noting that regulatory agencies will also likely be impacted by their own workforce capacity issues in this environment.

• New York State Enacts Mandatory Sick Leave Law with Job Protection During COVID-19 Quarantine

  03.23/Alert

  On March 18, 2020, Governor Andrew Cuomo signed Senate Bill S8091 into law to provide sick leave and job protection for New York workers during the COVID-19 crisis. Under the new law, effective immediately, companies cannot fire or penalize employees who are unable to work while subject to “a mandatory or precautionary order of quarantine or isolation due to COVID-19.” The order must be issued by the state of New York, the department of health, local board of health, or any governmental entity with authority to issue such orders. The job protection lasts for the duration of the period that employees are self-isolating under a mandatory or precautionary order. Employees who are able to work remotely while under the “stay at home” orders and who are asymptomatic or not yet diagnosed are not covered by the new law.

• California Executive Power and Industrial Facilities in the Wake of COVID-19

  03.23/Alert

  The COVID-19 pandemic has rapidly become one of the world’s most serious public health challenges, and has caused unprecedented disruption to industries in the United States and across the globe. Industries doing business in California have felt the impacts more acutely than most, as the state has become one of the nation’s “hotspots” for new COVID-19 cases. These impacts have sparked numerous efforts by state and local authorities in California to attempt to address the virus, encompassing everything from suspension of all public gatherings, to mass cancellation of sports and entertainment events, to citywide quarantines.

• COVID-19: IRS and States Extend Tax Deadlines

  03.21/Alert

  On March 20, the IRS issued Notice 2020-18 announcing that federal income tax payments and payments due on April 15 may be deferred until July 15. Notice 2020-18 supersedes Notice 2020-17, issued just two days earlier. States are quickly aligning with the IRS’s extension of time, with California already adopting similar relief. The relief is intended to ease an imminent payment burden and create liquidity, but high income individual taxpayers may disproportionately benefit from the deferral because they are most likely to pay final 2019 and 2020 estimated tax payments on April 15, whereas a large proportion of individual taxpayers actually receive refunds after filing their returns.

• President Trump Invoked the Defense Production Act: What Are the Implications?

  03.18/Alert

  Earlier today, President Trump invoked the Defense Production Act, codified at 50 U.S.C. §§ 4501 et seq., in response to the COVID-19 pandemic. The Act’s implementing regulations, found at 15 C.F.R. §§ 700.1 et. seq., promulgate the Defense Priorities and Allocations System (DPAS). Congress enacted the Act in 1950 to address the short supply of essential goods during the Korean War. The Act allows the federal government to require domestic industries to provide essential goods and services needed for the national defense.

• COVID-19: Analysis of H.R. 6201, the Families First Coronavirus Response Act

  03.18/Alert

  On March 18, 2020, the U.S. Senate passed H.R. 6201, the Families First Coronavirus Response Act, following U.S. House of Representatives action on the legislation several days earlier. President Trump is expected to sign the bill into law immediately.

• Scenarios Government Contractors May Face During the COVID-19 National Emergency

  03.17/Alert

  On March 13, 2020, President Trump declared that the outbreak of COVID-19 constituted a national emergency. Government contractors will face a number of scenarios—some familiar and some not—as a result of the outbreak. In this client alert, we raise four possible factual scenarios contractors are likely to encounter. We then analyze how contractors facing these scenarios can (1) best protect themselves from liability for schedule delays they may experience, and (2) best position themselves to recover for their attendant cost growth.

• COVID-19: Congress and Federal Regulators Tell Financial Institutions to Prepare for Coronavirus Changes

  03.16/Alert

  With the spread of the novel coronavirus (COVID-19) throughout the country, regulators and Members of Congress have begun advising financial institutions on how to handle situations in which the pandemic prevents individuals from repaying loans.

• M&A in the Time of COVID-19

  03.12/Alert

  As novel coronavirus (COVID-19)—characterized by the World Health Organization on March 11, 2020 as a pandemic—continues to spread across the globe, companies and transaction participants are grappling with increased risk and uncertainty posed by the virus. This note identifies a few ways in which the developing outbreak may present challenges, both fundamental and practical, to the deal-making process and timelines. It also offers an analysis of how the virus may impact negotiations around that mainstay of M&A lawyering, the “material adverse change” (MAC) clause.

• COVID-19 Emergency Funding and Tax Relief: Assessing Federal Opportunities

  03.11/Alert

  One thing is certain about how Washington policymakers will respond to the coronavirus (COVID-19) outbreak: there will be spending, both in the form of tax relief and through direct federal funding.

• COVID-19: Prepare Now to Maximize Insurance Recoveries

  03.09/Alert

  As COVID-19 continues to spread and to halt much of the global economy, by now many businesses have already been affected and others are taking the necessary steps to prepare for if and when the virus affects them.  The first step, as always, is to see to the physical and mental health and safety of your personnel. Right behind it, however, should be taking stock of the impacts and communicating losses to your insurance companies. The key questions as you plan your recovery are: What insurance covers your losses? Have you identified all the policies that may respond? How do you measure and document losses—especially lost profits—to the insurers’ satisfaction? Is there coverage for supply chain disruptions? And are there any government funds, such as FEMA or CARES Act assistance, available to aid your recovery?

• Mitigating Employment Law Risks as COVID-19 (Coronavirus) Spreads

  03/06/Alert

  As coronavirus disease 2019 (abbreviated “COVID-19”) spreads worldwide, businesses in the U.S. face practical and legal employment challenges as they take measures to further the immediate goal of preventing the spread of physical infection to and within their workforces.

• As Coronavirus Spreads, Businesses Must Be Prepared for a Crisis All Their Own

  03.03/Alert

  As of today, there are reportedly more than 90,000 confirmed cases of COVID-19, with the virus having reached every continent except Antarctica. As corporate America wrestles with the unfolding implications of coronavirus, here are three essential crisis management tips to ensure business continuity: