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  • 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.”).

  • Compliance Programs Must Track and Adapt to Changes and Risks
    06.11/Alert

    On June 1, 2020, DOJ updated its Guidance (2020 Update), once again, on how it will evaluate corporate compliance programs in deciding “whether to bring charges, and negotiating plea or other agreements.” The 2020 Update builds on the 2019 Update from April 30, 2019, and emphasizes three questions:

  • 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.

  • Senate Bill Could Result in De-Listing of Certain Chinese Companies and Non-Chinese State-Owned Enterprises from U.S. Securities Exchanges
    06/03/Alert

    On May 20, 2020, the U.S. Senate unanimously passed S. 945, the Holding Foreign Companies Accountable Act (HFCAA). If enacted, the bill would amend the Sarbanes-Oxley Act of 2002 (15 U.S.C. §7214) to require additional disclosures from certain issuers regarding foreign jurisdictions that prevent the Public Company Accounting Oversight Board (PCAOB) from performing inspections of auditors of public companies.

  • 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.

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