Insights

General Counsel Updates for March 20, 2020 – James Sanders

March 21, 2020

There has not been any major news overnight other than last night’s 8pm shutdown of non-life sustaining businesses ordered by Governor Wolf in PA.

The biggest question I have received is what category a business fits into.  As of now, I would recommend that you use your best judgment and if you are ordered to close by the respective authorities, then you should follow the directive.  In the alternative, you could also reach out to your local elected State representative to verify your category.

Please remember that this order relates to your physical location.  It does not mean you cannot work remotely from home.  You cannot be open to the public if you are in a category that is non-life sustaining.  The intent is get social distancing implemented.

A few other things:

    1. NFIB Update Call:  Today I will be listening to the National Federation of Independent Business (NFIB) update call at 12pm.  I will send out a follow-up notification with any further clarifications.  If interested, please use the following link:  https://www.nfib.com/webinars/covid-10-part2/
    2. Business interruption insurance:  It may be a good time to review your business insurance coverage and have a conversation with your agent/broker.  I had an interesting conversation with a business colleague that was told that this business interruption insurance does not apply to his business because he has the ability to work from home.  He argued that the essential part of his job is being on a client’s site for business inspections.  While not an issue now, I can see this issue being contested once we get on the other side of the coronavirus.  The article in the following link has an interesting solution:  https://riskandinsurance.com/butlers-risk-manager-calls-for-a-pandemic-risk-insurance-act/?rid=62098
    3. Force majeure:  This contract clause, which is seldom understood or vetted unless you are in manufacturing or logistics, permits a company to suspend or terminate the performance of its obligations for a period of time due to an unforeseeable event (think a hurricane hitting an oil rig in the Gulf of Mexico).  The big question, and one that is likely to be argued and litigated over, is whether these mandated shutdowns fall under this clause.  Given that each state has rolled out quarantines and shut downs differently, I imagine there will be disputes.   Please make sure that you fully understand the ramifications on your business if this clause is invoked by you or a supplier.
    4. Small Business Administration Loans:     The SBA has agreed to start making low-interest loans to small businesses that are struggling during this crisis.  The loans will be capped at $2M, with terms lasting as long as 30 months at rates of 3.75% for businesses and 2.75% for non-profits.  Applications are due by 12/21 through the following link:  https://www.sba.gov/funding-programs/disaster-assistance
    5. Deals & Liquidity:  The weird thing about the current state of the business world is that deals, for the most part, are still  moving forward.  Let’s hope that the credit markets stay liquid.   The following link provides some insight into this:  https://pitchbook.com/news/articles/coronavirus-updates-latest-news-and-analysis#top3

For other general business updates, please check out the attached emails from some very informative colleagues.  We are all coordinating our efforts to bring you the most accurate and important information related to your business.

As always, please don’t hesitate to email me with any questions or comments.  Keep moving forward!  We will get back to normal.

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