Background
The COVID-19 pandemic has led certain infrastructure businesses to face significant disruptions to operations and revenues, giving rise in many instances to breaches or potential breaches of finance documentation. This article considers at high-level issues to be mindful of when undertaking waiver processes to address such breaches.
Potential Waivers
Financial Covenants
The oil plunge starting on March 6 seems like a sucker-punch to the oil and gas industry after the price decreases and market unrest as a result of COVID-19. However, for those with capital to spend, it will lead to opportunities to acquire assets and distressed companies (including acquisitions of asset packages, acquisitions of companies, and take-private transactions). Below, we highlight five things to think about in connection with acquisitions of assets from distressed companies.
The oil price plunge starting on March 6 seems like a sucker-punch to the oil and gas industry after the price decreases and market unrest as a result of COVID-19. Midstream companies that rely on long-term producer contracts or steady revenue streams for moving hydrocarbons need to act quickly to mitigate the risks of a potential producer insolvency. Below, we highlight five things to think about on this front. Our energy team is experienced in these issues and invites the opportunity to discuss them with you and answer specific questions you may have.
The widespread reach of the coronavirus (“Covid-19”) outbreak has unfavorably impacted numerous industries all over the world and sent shock waves across the global financial markets. As the outbreak has spread globally, a growing list of some of the world’s biggest companies have started to warn markets about the adverse impact the Covid-19 outbreak will have on their results and financial condition.
The oil price plunge starting on March 6 seems like a sucker-punch to the oil and gas industry after the price decreases and market unrest as a result of COVID-19. However, for those with capital to spend, including international players, it will lead to opportunities to acquire assets and distressed companies (including acquisitions of asset packages, acquisitions of companies, and take-private transactions). U.S. Bankruptcy law can be daunting for many foreign investors; however, the bankruptcy process can provide real advantages.
On February 25, 2020, the United States Supreme Court in Rodriguez v. Federal Deposit Insurance Corporation[1] struck down a judicial federal common law rule—known as the Bob Richards rule—that is used by courts to allocate tax refunds among members of a corporate affiliated group where the group does not have a written tax sharing agreement in place, or, at least in some federal Circuits, where an agreement fails to allocate the refunds unambiguously.
On December 19, 2019, the Second Circuit held that appellants’ state law constructive fraudulent transfer claims were preempted by virtue of the Bankruptcy Code’s safe harbors that exempt transfers made in connection with a contract for the purchase, sale or loan of a security from being clawed back into the bankruptcy estate for
On January 14, 2020, the Supreme Court of the United States issued a decision resolving the question of whether a motion for relief from the automatic stay constitutes a discrete dispute within the bankruptcy that creates a basis for a final appealable ruling, or whether it simply is a controversy that is part of the broader Chapter 11 case, such that appeals would not need to be taken until the conclusion of the Chapter 11 case.
The oil and gas industry in the United States is highly dependent upon an intricate set of agreements that allow oil and gas to be gathered from privately owned land. Historically, the dedication language in oil and gas gathering agreements — through which the rights to the oil or gas in specified land are dedicated — was viewed as being a covenant that ran with the land. That view was put to the test during the wave of oil and gas exploration company bankruptcies that began in 2014.