The Coronavirus pandemic, while primarily a public health issue, is creating numerous legal concerns. We have identified some of the key issues and developments below. In addition, we have formed a task force comprised of partners and senior lawyers from across all practice groups and offices to track developments and provide timely guidance to clients on Coronavirus-related issues.

M&A

Overview

The recent approval by the Irish High Court of a scheme of arrangement that restructured US$1.65bn of liabilities of Ballantyne Re plc (Ballantyne) confirms Dublin as one of the most effective restructuring venues in the EU. The detailed decision of Justice Barniville (available here) offers significant precedential value and is a clear endorsement that Irish schemes can be used to implement complex cross border restructurings. The Irish statute governing schemes is very similar to that of England and Wales.

Essence of the Ballantyne scheme:

Cash flow is the life blood of the construction industry, goes the mantra. Construction projects often have long supply chains. When cash stops flowing down the chain, businesses can fail. There is all too much recent evidence of this.

Someone in the chain (say, a main contractor) could seek to provide in a contract that it does not have to pay the party below (subcontractor) until it has been paid by the party above (employer). This is a 'pay-when-paid' clause.

On November 23, 2018, the German Federal Council (Bundesrat) approved the Tax Reform Act of 2018 (the "Tax Reform Act"; Gesetz zur Vermeidung von Umsatzsteuerausfllen beim Handel mit Waren im Internet und zur nderung weiterer steuerlicher Vorschriften), which was passed by the German Parliament (Bundestag) on November 8, 2018.

On November 23, 2018, the German Federal Council (Bundesrat) approved the Tax Reform Act of 2018 (the “Tax Reform Act”; Gesetz zur Vermeidung von Umsatzsteuerausfällen beim Handel mit Waren im Internet und zur Änderung weiterer steuerlicher Vorschriften), which was passed by the German Parliament (Bundestag) on November 8, 2018.

On November 23, 2018 the German Federal Council (Bundesrat) approved the Tax Reform Act of 2018 (the “Tax Reform Act”; Gesetz zur Vermeidung von Umsatzsteuerausfällen beim Handel mit Waren im Internet und zur Änderung weiterer steuerlicher Vorschriften), which was passed by the German Parliament (Bundestag) on November 8, 2018.

Avago Technologies Wireless (USA) Manufacturing Inc. acquired PLX Technologies, Inc. for $6.50 per share in cash. After the $300 million merger closed, certain former PLX stockholders sued for damages, alleging that the PLX directors had breached their fiduciary breaches, aided and abetted by both Potomac Capital Partners II, L.P. (a hedge fund that is an activist stockholder and had three designees on the PLX board) and the PLX board’s financial advisor (the “Banker”).

If a transaction by a company amounts to an "unlawful distribution", and the company subsequently goes into liquidation, will an action for recovery of the benefits of that distribution, brought against the directors who authorised the transaction, be statute-barred if it is commenced by the liquidator of the company more than 6 years after the distribution was made?

Credit agreements by their terms commonly bar the borrower from seeking punitive, indirect, special or consequential damages for a breach of the agreement by lenders and their affiliates. The clauses, as enforced, prevent a borrower from obtaining damages for harm that may be suffered by the borrower's business if the lender wrongfully declines to fund. The clauses prevent lenders from exposure to open-ended damages claims if the lenders refuse to lend to a borrower, including damages that are the direct and indirect result of the failure to lend.

DOMESTIC

Research on the impact of repossession risk on mortgage default

Terry O’Malley published an economic letter considering whether reducing the risk of repossession resulted in more Irish borrowers defaulting on their mortgages. The letter considers the impact of the ''Dunne judgment'' in 2011 which temporarily removed a bank's ability to lawfully repossess a home. One of the key findings was that borrowers defaulted on mortgages at a higher rate than if the repossession regime at the time was legally upheld.