Among the only certainties for the post-COVID lending world is the uncertainty of commercial real estate values.  Among the classes of real estate that surely will be immediately diminished in value are hospitality and most brick and mortar retail, but even the value of industrial and office properties will be closely scrutinized as questions are posed regarding changes in how companies conduct their businesses and which types of businesses will recover most fully.  Ignoring the obvious challenges faced by hotels, stores, movie theaters and restaurants, will office buildings ever re-fill with white collar workers after they have demonstrated an ability to work remotely?  Which factories will spring back to full productivity, and how will the demand for work space change?  And most fundamentally to real estate lenders and investors, what will happen to rental and sale values in the face of this uncertainty?  These questions will have an immediate impact on the Chapter 11 process and will provide opportunities for business debtors to drastically reduce and modify liabilities secured by real estate.  Real estate lenders in turn may have to resort to the often-misunderstood provisions of the Bankruptcy Code found in Section 1111(b) dealing with under-secured real estate loans.   
Continue Reading Election Time: Bankruptcy Code 1111(B) in the Post-COVID World

The Paycheck Protection Program (“PPP”), as enacted under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, provides federally-guaranteed loans up to a maximum amount of $10 million to qualified businesses, which can be fully forgivable, to encourage businesses to retain employees through the COVID-19 crisis by assisting in the payment of certain operational costs.
Continue Reading Computational Framework for Determining Number of Employees for Eligibility, Qualifying Loan Amount and Forgiveness for a PPP Loan

On April 14, 2020, the U.S. Small Business Administration (SBA) issued its Third Interim Finale Rule[1]   with respect to the Paycheck Protection Program (PPP), as enacted under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The Third Interim Final Rule is supplemental to the (i) First Interim Final Rule issued by the SBA on April 2, 2020, (ii) Second Interim Final Rule issued by the SBA on April 4, 2020 and (iii) Applicable Affiliation Rules fact sheet that was issued by the U.S. Department of Treasury (Treasury) on April 4, 2020 and (iv) the Frequently Asked Questions fact sheet (FAQ)[2] issued by the U.S. Department of Treasury (Treasury), which was last updated on April 15, 2020 at the time of this publication.
Continue Reading Further Expansion Of Eligibility And Additional Guidance On The Paycheck Protection Program: The SBA’s April 14, 2020 Interim Final Rule

On April 9, 2020, the Federal Reserve issued an updated term sheet for the Term Asset-Backed Securities Loan Facility (“TALF”).  Under TALF, the Federal Reserve will make an equity investment of $10 billion in a special purpose vehicle (“SPV”) that will in turn make up to $100 billion of non-recourse loans fully secured by eligible ABS.   
Continue Reading Term Asset-Backed Securities Loan Facility

The COVID-19 pandemic has caused unprecedented economic disruptions worldwide.  Businesses that were previously flourishing are now seeing rapid declines in demand and revenue, disruptions in their supply chains, and other operational interferences.  Previously projected business plans for development and expansion may no longer be feasible.  Boards of directors facing these challenges would be well served to review their legal obligations and fiduciary duties as they help guide their companies through these challenges.
Continue Reading Precautionary and Prudency Measures for Boards Addressing COVID-19 Business Uncertainties

With the World Health Organization declaring COVID-19 a pandemic on Wednesday, March 11, 2020, businesses are likely to continue to feel its effects.  When businesses are unable to perform their contractual obligations as a result of COVID-19, force majeure clauses may become important.
Continue Reading Force Majeure Clauses and COVID-19 – Can Force Majeure Clauses Excuse Performance Under New York or Delaware Law in a Pandemic?

On April 3, 2020, the U.S. Department of the Treasury (Treasury) and U.S. Small Business Administration (SBA) released further guidance on the affiliation rules applicable to the Paycheck Protection Program (PPP), as enacted under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, via the Treasury’s Applicable Affiliation Rules fact sheet and the SBA’s Second Interim Final Rule[1] (collectively, the Updated Affiliation Guidance). The Updated Affiliation Guidance is supplemental to the SBA’s First Interim Final Rule that was issued on April 2, 2020.
Continue Reading Updates on the Affiliation Rules Applicable to the Paycheck Protection Program (Title I of the CARES Act)

On April 2, 2020, the U.S. Small Business Administration (SBA) released its Interim Final Rule[1], which provides further guidance on the Paycheck Protection Program (PPP) as enacted under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. On April 2, 2020 the SBA also issued an updated sample application form.

The SBA’s Interim Final Rule clarifies, contradicts and provides additional interpretative guidance related to the CARES Act.  We highlight the following:
Continue Reading Updates on the Paycheck Protection Program under the CARES Act: The SBA’s April 2, 2020 Interim Final Rule

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act, or the “CARES Act” to provide nearly 2 trillion dollars in aid and relief to individuals, businesses, and other entities in the wake of the spread of COVID-19.  Included in the CARES Act are tax and loan provisions intended to provide financial relief to people and businesses suffering as a result of the disease.

The following summarizes certain key tax-related provisions in the CARES Act.
Continue Reading The CARES ACT – Tax Relief