As of June 19, 2020 —The growing public, political and economic turmoil arising out of the COVID-19, or “coronavirus,” infectious disease strain is creating a broad range of increasingly serious concerns for businesses and governments around the world and is having an unprecedented short-term impact on consumers and on the debt and equity capital markets. The long-range implications are impossible to predict, but recent market volatility attributable at least in part to the developments seem disproportionate to the events we’ve seen to date. At the same time, the pandemic has proven extremely difficult to contain, and efforts across the United States have shifted to voluntary isolation programs and, in many states widespread closures of businesses, schools and workplaces. Several states, including California, Oregon and Washington, have issued work-from-home or shelter-in-place orders. The impacts of these measures on commerce and industry cannot yet be predicted but are expected to be severe, and federal and state government agencies have announced or are considering a broad range of measures aimed at stemming both the health crisis and the ongoing economic shockwaves. Our clients, like many others, are increasingly concerned about not only the operational risks, but also to risks arising out of the public’s response. Our attorneys are currently advising clients as to the wide-ranging implications and we have decided to publish a bulletin to help our clients and others anticipate and address some of the risks that seem to flow from these circumstances.

We will provide regular communications to our clients and friends addressing the many issues and risks as they occur because of COVID-19. In the meantime, we at Buchalter wish health and safety for our clients and friends and their families.

 


COVID-19 Resources by State

 


Webcasts 

 


Alerts

Labor & Employment

Corporate Law

Real Estate

Commercial Finance

Health Care

Energy and Natural Resources

Land Development and Regulatory Compliance

Litigation

Intellectual Property 

Insolvency and Financial Law 

Insurance Law

Mortgage Banking

Tax, Benefits and Estate Planning

Agribusiness/Agrifinance

Aviation

Education Law, Charter & Private Schools

Additional Updates

 


Buchalter’s Legal Resource Group

Buchalter’s Legal Resource Group anticipates that COVID-19 will present clients with the following issues:

  • Labor & Employment — Workplace safety, remote operation, mandatory or voluntary leave with or without pay, wage and hour issues (particularly with offsite or remote working arrangements), OSHA and CalOSHA standards, best practices for employee safety, required accommodations (particularly for employees who are more vulnerable), discrimination and termination issues and employee privacy issues.
  • Corporate and Transactional — Businesses that have operational risks that arise with employees, customers, and vendors whose performance might be affected by the outbreak or related management concerns. The effect of a volatile securities market on M&A and capital markets transactions – including, but not limited to, those involving public companies. The effects of the coronavirus on financial reporting, including the issuer’s disclosures and the audit firm’s audit quality (for example, audit firm access to information and company personnel).
  • Real Estate — Impacts on building owners, developers, landlords, tenants, and real estate transactions.
  • Commercial Finance and Lending — Liquidity: Borrowers drawing down their existing credit facilities to have cash on hand for future supply line and market disruptions. Defaults, Forbearances & Workouts: COVID-19’s impact on many businesses and industries will likely trigger a surge in defaults, forbearances and workouts. Lenders need to review their loan documents, with counsel, for deficiencies and so-called “soft-spots”. Borrowers need to review the documents for provisions that may excuse the lender from making further loans. Material Adverse Change: Determining whether a MAC has occurred, or is likely to occur, based on COVID-19 related disruptions and what lenders should ask for to help make such determination. What to consider when negotiating the MAC clause in pending loan transactions.
  • Mortgage Banking — Loan workouts, loan defaults, foreclosures, loss mitigation and loan modifications, and receiverships, local and state government mandates on mortgage hardship forbearance.
  • Insolvency and Financial Law Group — Buchalter’s Insolvency and Financial Law practice group has significant experience helping its clients deal with the devastating effects of major business disruptions. The reduction of business resulting from the COVID-19 pandemic will cause both immediate and long-term problems for many businesses. The reduced cash flow and inability to meet payment obligations will place a number of companies as well as their counterparties into financial distress. Buchalter’s national insolvency and restructuring practice has successfully represented its clients through complex proceedings in all economic climates. Trusted by the nation’s largest banks and other financial institutions, as well as creditor committees, developers, pharmaceutical companies, retailers and a multitude of other parties requiring financial related solutions, Buchalter combines strategic legal protections with keen industry intelligence to deliver superlative results.
  • Healthcare — Regulatory, compliance, and risk management, advice for hospitals, health systems, physician/physician groups, laboratories, and other providers.
  • Energy and Natural Resources — Manufacturing and transportation delays and labor stoppages, energy regulatory compliance.
  • Land Development and Environmental — Planning, design, construction, and operation of buildings, delays in project milestones, and integration with public spaces that need to be incorporated into new developments at the entitlement stage, ability of project sponsors to timely complete their projects at the local, state, and federal approval levels. The practice group also is advising clients on a regular basis regarding regulatory compliance matters within the backdrop of recently issued COVID-19 orders.
  • Insurance — Assisting policyholders in connection with analyzing their insurance policies and pursuing paths to potential insurance coverage for their business losses and liability claims related to the coronavirus.
  • Tax — Local, state, and federal governments are taking swift action to utilize, expand, and enact tax relief to address hardships caused by the Covid-19 pandemic. These actions include tax payment extensions, such as the IRS and California granting extensions until July 15, 2020 (currently June 15 for California) to pay 2019 income tax liability and first quarter 2020 estimated income tax payments (ordinarily due on April 15, 2020), subject to a capped amount, without interest and penalties. In addition, the IRS is providing similar relief with respect to the payment of 2020 federal estimated income tax payments. Some cities, such as Seattle, will defer business and occupation tax collections for eligible business owners.
    Tax exemptions to provide needed services and relief are being expanded. The rules regarding Health Savings Accounts (HSAs) and high deductible health plans will be loosened, including to provide Covid-19 testing and treatment without copayment. Presidential declarations are expected to allow employers to make tax-free disaster relief payments directly to employees for certain Covid-19-related personal, family, and property repair, replacement, and rehabilitation expenses.More tax relief will be finalized soon. On March 18, 2020, Congress passed H.R. 6201, Families First Coronavirus Response Act. This bill will expand unemployment benefits and require employers to provide paid sick and family leave to employees, large portions of which would be subsidized by refundable tax credits. Businesses facing tax payments, collections, bad debts, increased expenditures, difficulty with payroll taxes, underfunding of reserve accounts and pension plans, unexpected COBRA obligations, and liquidity pressures will need tax relief and practical informed advice to address tax challenges during this crisis.
  • Benefits — COBRA, Hardship Withdrawals, 401(k) Loans and Distributions, Defined Benefit Plan Funding, Short-term Disability Coverage and Plans, Long-Term Care, Electronic Disclosures, Health Insurance and Self-Funded Plan Rules. Medicare Secondary Payer and Medicaid Coordination Issues.