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Over the last year, law firms of all sizes, from the largest in the world to small and midsize firms, have pursued funding from multiple rounds of the Payment Protection Program (PPP) . For some, the PPP...
On January 29, 2021, the Director of the U.S. Centers for Disease Control and Prevention (CDC), Dr. Rochelle P. Walensky, officially extended the federal government’s moratorium on residential evictions...
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This client alert discusses the impact of the novel coronavirus (COVID-19) on companies that may now need to restructure or file for bankruptcy. COVID-19 has already led to bankruptcy and insolvency filings in different industries, including the drug, retail, airline, and cruise industries. These and other industries (such as the oil and gas industry) are experiencing severe financial distress during this turbulent time.
Companies should begin considering, among other things, their current financial situation, impending loan obligations, cash flow and other financial projections, and economic and industry forecasts (which are continuing to evolve during this crisis). Companies should also evaluate their loan agreements to determine whether the company is currently in default on certain of its obligations or anticipates a default in the near future. Companies should engage their lenders in discussions regarding whether the company is able to cure any existing default, and/or whether the company believes a waiver, forbearance, or amendment is appropriate. For its part, lenders must review their legal position in relation to their borrowers. If the lender believes that, under the circumstances, it is not in its best interest to declare an event of default, the parties may then begin negotiating the terms of a waiver, forbearance, or amendment, as appropriate. In evaluating its options, companies may want to also consider, among other things, whether a sale of some or all of the company’s assets should be pursued or whether to file a Chapter 11 bankruptcy. Companies that are impacted or anticipate being impacted by the COVID-19 pandemic, and the resulting and likely economic downturn, should quickly begin this process of assessing their financial condition and planning, or creating contingency plans, to address the company’s current or anticipated financial distress. The client alerts and content below discuss these and related issues in detail.