Seller’s COVID-related actions breached an “ordinary course” covenant, even though the COVID-19 pandemic did not give rise to a “material adverse effect.”
Authored by Michael R. Neidell and Zachary E. Freedman, Law Clerk
On June 8, 2020, the Federal Reserve released additional guidance on the Main Street Lending Program, completely replacing earlier set of FAQs (April 30, 2020 and May 27, 2020) with new FAQs and revised term sheets.
On May 27, 2020, the Federal Reserve released additional guidance on the Main Street Lending Program, completely replacing an earlier set of FAQs (April 30, 2020) with new FAQs and issuing model loan documents. This post reflects the new guidance.
The U.S. Securities and Exchange Commission (the “SEC”) filed enforcement actions on May 14, 2020, against two unrelated companies, Turbo Global Partners, Inc. (“Turbo”) and Applied BioSciences Corp. (“APPB”). The SEC charged both companies with securities fraud based on alleged materially misleading statements that the companies were offering and shipping products to combat the coronavirus (COVID-19). These actions taken by the SEC are consistent with approaches taken by other regulators, including the Federal Trade Commission and Food and Drug Administration (the “FDA”), with regard to misleading statements made in connection with coronavirus-related products. On the whole, regulators appear to be particularly cognizant of businesses and individuals seeking to take improper advantage of the circumstances created by the global pandemic, and as such are taking action against such companies and individuals.
COVID-19 has caused immediate and severe disruption in commercial real estate. Common sense deferrals and restructurings will be needed. In this client alert, we discuss some of the unique dynamics of CMBS loan restructurings.
In new guidance issued on April 30, 2020, the Small Business Administration (“SBA”) stated that businesses that are part of a “single corporate group” may not receive Paycheck Protection Program (”PPP”) loans exceeding $20 million in the aggregate for the “single corporate group.” This cap is effective immediately with respect to any PPP loan that has not been fully disbursed by April 30, 2020. This client alert explains the new guidelines and related considerations.
On April 9, 2020, the Federal Reserve announced the details of a new program established under the CARES Act, the Main Street Lending Program, intended to assist small and medium-sized businesses impacted by the COVID-19 pandemic by making up to $600 billion in loans available for eligible borrowers. The program is designed for businesses with up to 10,000 employees or up to $2.5 billion in 2019 revenues. This client alert summarizes the terms of the loans available under this new program.
In a client alert issued by Olshan's Shareholder Activism Group last week, we reported that certain factions within the Delaware State Bar Association were attempting to fast track an amendment to Section 110 of the Delaware General Corporation Law that would allow Delaware corporations to postpone their annual meetings of stockholders in light of the COVID-19 pandemic. We expressed serious concerns that the proposed amendment could be abused by corporations looking to postpone their annual meetings and disenfranchise stockholders under the pretense that such a delay is required due to COVID-19. Shortly after the release of our client alert, Governor John Carney issued on April 6 the tenth modification to his State of Emergency Declaration relating to COVID-19 intended to reduce the number of in-person stockholder meetings held by Delaware corporations in order to protect the health and safety of the civilian population in light of the pandemic. As discussed in this client alert, we believe the Governor's order is sufficient to allow corporations to address COVID-19 related logistical challenges they may be facing with respect to their meetings and there is no need for state legislators to rush to adopt a statutory amendment that could threaten stockholder rights.
As businesses in the current environment are looking for ways to conserve or obtain liquidity, we have set forth below some avenues to liquidity, one or more of which might be applicable to your business.
On March 25, 2020, the SEC issued an updated executive order granting extended filing relief and disclosure guidance as publicly traded companies address the COVID‑19 pandemic and its effect on operations and financial condition. The SEC Staff also recently issued a statement regarding the manual signature requirement for electronic filings with the SEC. This post summarizes the significant aspects of the SEC’s recent pronouncements.
Despite the continuing coronavirus global pandemic, business marches on, including compliance with applicable regulatory requirements. Regulatory bodies recognize that the reduced staffing, “social distancing” and other factors could hamper efforts to comply with various regulations. The U.S. Securities and Exchange Commission (“SEC”) has acted to ameliorate certain of the burdens publicly traded companies are currently facing. In addition, companies need to take into account the effects of COVID-19 on their businesses and regulatory disclosures, and we have highlighted certain significant considerations in this client alert.