The economic fallout from the COVID-19 pandemic will leave in its wake a significant increase in commercial chapter 11 filings. Many of these cases will feature extensive litigation involving breach of contract claims, business interruption insurance disputes, and common law causes of action based on novel interpretations of long-standing legal doctrines such as force majeure.

Landlords are often among the very first to feel the impacts of their tenant’s financial woes. In today’s unpredictable economic environment, many businesses are forced to shut their stores temporarily while the risks of COVID-19 continue to play out. Within the last few days many large and small retailers have unilaterally announced publicly that they would not be paying upcoming rent. In these unprecedented times, landlords must be aware of the risks they face in light of what is certain to be a previously unheard of level of tenant defaults.

Introduction

Debtors in bankruptcy, including hospitals and skilled nursing facilities, left out under the CARES Act PPP

In Wells Fargo Bank, N.A., f/b/o Jerome Guyant, IRA v. Highland Construction Management Services, L.P. et al., Nos. 18-2450-52 (4th Cir. March 17, 2020), the Fourth Circuit Court of Appeals recently upheld that a borrower’s indirect economic interests in a limited liability company (LLC) were not assigned to a lender under a conveyance in a security agreement assigning mere membership interests, pursuant to Virginia state law.

Facts

On April 3, 2020, the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) re-issued and extended General License No. 13E (“GL 13E”) to continue the validity period for transactions concerning Nynas AB and its subsidiaries (“Nynas”) that otherwise would be prohibited under Executive Order 13850 or Executive Order 13884 given Nynas’s 50% indirect ownership by Petróleos de Venezuela S.A. (“PdVSA”).

Bankruptcy can provide important advantages to companies considering M&A activity today. M&A purchases of bankrupt companies obviously often feature significantly depressed valuations and a small universe of potentially viable purchasers.

M&A activity that is part of the bankruptcy process will prioritize speed and efficiency, offering a number of potentially important benefits over the traditional merger process, including:

Surfant sur les tensions du marché mondial des produits de protection sanitaire et leurs composants, les escrocs développent les fraudes aux fournisseurs.

Ayant choisi leur interlocuteur et se faisant passer pour un fournisseur habituel de la société ou une société détenant ces produits ou composants sous tension, ils développent une stratégie fondée sur la rareté et l’urgence pour faire effectuer sans délai des virements pour sécuriser les contrats.

Les règles de prudence doivent être d’autant plus respectées :

As COVID-19 wreaks havoc on people around the world, it is also severely disrupting numerous companies’ health, balance sheets, and ability to survive. The impact is already manifesting itself as businesses temporarily suspend operations and furlough their employees as revenue is lost and expenses mount. It is inevitable that many of these companies, especially those that were already distressed prior to the COVID-19 crisis, will need to restructure their debts.

Restructuring Leases, Other Contracts, and Loans

Small businesses have traditionally had difficulties reorganizing under Chapter 11 of the Bankruptcy Code. The legal fees necessary to prepare a plan and disclosure statement and navigate the confirmation process were often prohibitively expensive. Further, the reporting requirements and United States Trustee fees mandated by Chapter 11 added significant expenses to the already struggling debtor’s cash flow.