As we attempt to mitigate the potential effects of the COVID-19 pandemic on our global supply chain, stakeholders should be actively considering downstream impacts. In this current environment, considering prospective internal and external bankruptcy and restructuring threats may be more important than ever.

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act, Public Law No. 116-136 (the “CARES Act” or the “Act”), the stimulus package designed to mitigate the widespread economic impacts of the coronavirus (“COVID-19”). The Act includes important temporary modifications [1] to Subchapter V of the Bankruptcy Code (the “Code”), applicable to small -business debtor reorganizations.

Temporary Increase in Debt Limit

All too often the task of procuring and renewing D&O insurance at a portfolio company is assigned to the portfolio company’s CFO or Controller, who employs an insurance broker to find the best price for the amount of coverage deemed appropriate by the broker. When such insurance is procured and thereafter renewed, the CFO/Controller simply reports to the board the fact of the procurement/renewal and few questions about the terms of coverage are discussed at the board level. This can be a big mistake.

The U.S. Bankruptcy Court for the District of Delaware recently granted in part and denied in part dismissal in favor of the defendant car manufacturer in a fraudulent transfer adversary proceeding brought by the Chapter 11 trustee in Emerald Capital Advisors Corp. ex rel. FAH Liquidating Trust v.