The COVID-19 outbreak has caused unprecedented disruption to business operations worldwide and significantly altered both personal and professional relationships. The changes being encountered are extremely dynamic. We are closely monitoring COVID-19 developments and making adjustments to the way we do business as we keep our people and our communities safe. As a firm, our resources, people and client-focused culture well situate us to provide uninterrupted service to our clients.
Dechert has created a COVID-19 Task Force to provide guidance and support to clients across each of our disciplines, including antitrust, capital markets, corporate, employee benefits, labor and employment, leveraged finance, litigation, M&A, private equity, taxation and trade, as well as pro bono work, with updates occurring daily. Below we have a dedicated webpage and library of relevant materials with a link to our Broadcast Series and upcoming webinars. | Read about our commitment to pro bono during COVID-19
Our unwavering commitment to providing high-level service to our clients remains the same as ever. We maintain a dedicated and determined team committed to supporting our clients in the current environment, so that we can emerge from this challenging time stronger and more committed partners. For more information, please contact Stuart Davis.
As COVID-19 is a fluid situation, please note that these articles are current as of the date of publication. Please check back periodically for the most up-to-date information.
The European Commission has issued guidelines on how to prevent or moderate investments by non-EU investors in European companies in several key sectors, including healthcare, energy and finance. The EU's new Foreign Direct Investment Regulation (FDI Regulation) takes effect in October and keeps the decision-making function with Member States while providing the European Commission with nothing more than advisory powers.
The global COVID-19 pandemic has changed how merger enforcement regimes around the world are currently reviewing proposed transactions. Two weeks into the new environment, we now have a body of experience from which to assess how merger reviews are proceeding (and may continue to evolve) under these unprecedented circumstances. Here is what we have experienced and what it means for your deal.
Amongst many moves being initiated in different markets, AIM regulation set out certain temporary measures it is implementing to support AIM companies and nominated advisers in an attempt to afford market players some latitude during the pandemic crisis. AIM regulation has stated it will be applying 'discretion' to the application of some of the junior market's rules until further notice. AIM companies should continue to meet their disclosure obligations without delay.
The global capital markets are in a state of flux, with major sell offs in global stock markets due to fears about the impact of the COVID-19 coronavirus, as well as a result of the slump in oil prices. In these precarious and volatile times, issuers should take time to consider the following.
In the context of COVID-19 pandemic and subsequent lockdown measures, many professionals are facing difficulties, if not impossibility, to fulfill their contractual commitments. Yet contracts are still binding. In the hypothesis where renegotiation of the contract is not possible or would not be sufficient to overcome the difficulties to perform the contract, force majeure could prove to be a useful tool to protect professionals who are exposed, in good faith, to the temporary or permanent impossibility of fulfilling their contractual commitments provided that the specific terms of the contract regarding force majeure and legal requirements are strictly observed.
COVID-19 constitutes a force majeure event. However, if the risk of unforeseen events like the COVID-19 pandemic is fully attributed to one party in the agreement, that party might not be entitled to request an adjustment of the terms of the agreement, or to terminate the agreement, and might even be held liable for the damages caused by the non-performance under German statutory law.
Given the recent recommendations for social distancing in connection with COVID-19 as well as stay-at-home orders that have been implemented in most states, many public companies, including business development companies, and registered closed-end funds will need to address how best to satisfy their obligation to hold an annual stockholder meeting while complying with these restrictions. Companies and funds may elect to hold a "virtual-only" stockholder meeting or a so-called "hybrid" stockholder meeting in line with recent SEC relief that eases compliance with federal securities laws governing annual meetings.
In light of the regulations, and the continuation of travel restrictions and mandatory quarantine measures for arriving travelers globally, listed Hong Kong issuers should consider the adoption of technology-assisted virtual meetings, hybrid virtual meetings, or participation via teleconference when interacting with their shareholders provided these measures are allowed under the laws and regulations governing the listed issuer in question as well as its constitutional documents.
The Information Commissioner's Office has now confirmed specifically the approach it will take to the enforcement of data protection obligations in light of its role as an independent regulator acting in the public interest and its approach of being a pragmatic and proportionate regulator.
The shift towards working remotely has created a unique opportunity for cyber-attackers and criminals – the European Union Agency for Cybersecurity has already reported an increase in phishing attacks. Dechert’s Data Privacy and Cybersecurity Group has produced an infographic of key security issues to bear in mind to keep your data secure.
This overview sets out a number of important clarifications on the practical application of recent legislative developments as well as recent COVID-19 related measures to dispute resolution, contract performance and creditors' rights.
To address problems faced by participants and beneficiaries in exercising their healthcare coverage continuation rights, the U.S. Departments of Labor and Treasury jointly issued a notice on May 4, which gave plan participants an extended period of time to elect continued healthcare coverage under COBRA. While the COBRA changes provided by the Notice are very favorable for qualified beneficiaries, by extending the option period to elect COBRA coverage, they increase the risk of adverse selection for insurers – i.e., only those most in need of coverage, and therefore the most expensive group to insure, will elect COBRA coverage.
Companies receiving assistance under Title IV of the Coronavirus Aid Relief and Economic Security Act will be required to limit compensation payable to certain highly paid officers and employees. This OnPoint identifies various interpretative and operational challenges under the new rules that companies seeking assistance will need to address.
Interest rates that are used for loans to family members, loans to trusts and to value gifts to certain trusts have been further reduced as a result of market conditions driven by the COVID-19 pandemic. These historically low interest rates present time-sensitive estate planning opportunities that could produce significant transfer tax savings.
As each of us copes with the ongoing challenges posed by COVID-19, we hope this finds you and your families safe and healthy. We wanted to reach out to let you know we are here to help ensure you are comfortable with your current estate planning documents – and to call attention to opportunities and relief that are currently available.
As the impact of the COVID-19 coronavirus continues to play out, many entities need to rapidly assess their liquidity availability. As part of that, the UK government has introduced a number of funding and support measures intended to address the potential impact of COVID-19 on businesses operating across a range of industries. There has now been announced the Coronavirus Job Retention Scheme, various business rate and grant reliefs, an extension of the HMRC time to pay tax arrangements, statutory sick pay relief for small and medium sized businesses and deferral of VAT payments.
Following up on a previous OnPoint, a foreclosing lender filed an opposition memorandum asserting that a mezzanine "foreclosure" pursuant a non-judicial UCC sale is not subject to the restrictions on foreclosures in New York. In this particular case, the Borrower's defaults pre-date the COVID-19 situation by months. For other lenders, however, a new Executive Order 202.28 could have more significant implications as it explicitly prohibits the "initiation of any proceeding" as well as the enforcement of any foreclosure.
When clients are adversely affected by governmental measures, we assist them in evaluating what forms of recourse might be available and, where appropriate, pursuing recourse through international arbitration or other means. This OnPoint addresses the types of measures arising out of past crises that have been so severe as to result in international arbitration, and identifies immediate action items that investors in the banking and finance sectors could take to protect their investments.
Financial services providers that have non-U.S. affiliates should evaluate whether they are required to file the Benchmark Survey of U.S. Direct Investments Abroad (BE-10). Citing the disruptions caused by the COVID-19 coronavirus pandemic, the Commerce Department's Bureau of Economic Analysis recently reiterated that U.S. Reporters may request extensions of the applicable filing deadline.
Both the German Federal Government and the German Federal States have enacted a variety of key government financial support programs available to private equity and venture capital-financed companies in Germany as they seek to mitigate the economic impact of COVID-19.
The CARES Act provides several ways for nonprofits to receive financial support during the pandemic. This OnPoint provides an overview of the Paycheck Protection Program, the Economic Injury Disaster Loan Program and the Mid-Sized Business Loan Program and provides an FAQ for nonprofit organizations as to the differences between the programs.
The Patent Trial and Appeal Board is adjusting its deadlines for some patent owners looking to file inter partes review and post grant review extensions. Read the following OnPoint to see if you're affected.
The COVID-19 economic crisis has increased the risk of defaults and restructurings of sovereign bonds. International arbitration of sovereign bond disputes has led to sizeable settlements in the past, which can affect the impact of sovereign debt and restructurings both on sovereign states and on foreign investors. Governments and bondholders should fully assess how the international investment protection system affects their rights, as well as the implications for any negotiations over sovereign bond defaults or restructurings.
The SPC's COVID-19 opinions unify the adjudication standards of Chinese courts and provide more clarity to parties of potential disputes in assessing the outcome of their cases. Notably, the COVID-19 opinions are issued as the first in a series of judicial interpretations by the SPC. It is expected that more SPC judicial interpretations relating to similar subjects will be issued in the near future.
The U.S. government has implemented several trade-related measures in response to COVID-19, including a new Federal Emergency Management Agency regulation allowing companies to export personal protective equipment in certain circumstances, a 90-day duty deferral issued by Customs and Border Protection, and extension of the temporary closure of the U.S. borders with Canada and Mexico until May 20, 2020.
On April 10, 2020, the Department of Homeland Security, through the Federal Emergency Management Agency (FEMA), issued a new rule at 44 C.F.R. Part 328 prohibiting exports of certain PPE used in the global response to the COVID-19 pandemic, otherwise known as the FEMA Rule. The FEMA Rule will remain in place until August 10, 2020. For companies that need to export PPE for critical reasons, we suggest quickly preparing an application before FEMA receives more applications than it can handle.
The Information Commissioner's Office has issued guidance for UK employers on COVID-19 testing as a condition for returning staff to the workplace. This guidance looks at testing in the context of employee consent, GDPR compliance, the use of thermal cameras and testing alternatives, among other areas.
UK employers will need to continue to monitor and address workers' holiday arrangements carefully as the longer that restrictions on attending work and travelling generally stay in place, the greater the potential for disputes and HR issues more generally in relation to holiday. How employers encourage or require workers to take holiday during lockdown or furlough and how they manage the pent up demand for holiday once travel and other restrictions are lifted, will need careful planning, management and communication.
With hand sanitiser gel stocks under pressure worldwide, increasing numbers of businesses are considering how they could begin direct production of their own to ensure that they have sufficient stock for their own use. If your business plans to manufacture its own sanitisers following the WHO Guide, using ethanol or isopropyl as the active ingredient, and gets its active ingredient from approved sources, approval may now not be needed to do so.
With protective face masks becoming a scarce resource during the COVID-19 pandemic and authorities stepping up public requisitions and export controls on these products, businesses who require this equipment for global manufacturing operations may have concerns about supply reliability over the coming months. While there is no current indication a public requisition is likely to be launched in the UK, existing emergency powers legislation could enable confiscation measures to be taken swiftly.
Class action lawsuits over tuition refunds have been filed against universities in at least 15 states. These putative class actions present significant challenges for colleges and universities. We will continue to monitor these actions and hope to periodically share our thoughts, which we hope will be helpful to you and your institutions in these difficult times.
The COVID-19 pandemic finds nursing homes and other senior living facilities confronting unprecedented operational challenges and risks. The highly vulnerable population served, combined with the near impossibility of both caring for residents and practicing extreme social distancing, has made them easy targets for the spread of contagion. Owners, operators and administrators can proactively reduce their litigation risk, applying lessons learned from other crises to help navigate these unprecedented times.
Although deal volume has already started to decrease as a result of the impact of COVID-19, some sale processes remain ongoing. As a result of the measures put in place globally to control the spread of the virus, buyers need to ask relevant questions of their targets to fully understand how they are dealing with the current situation and their plans to mitigate any delayed impact that it could have.
In the wake of the COVID-19 pandemic and its continuing impact on global financial markets, executing M&A deals at the right price has, almost overnight, become more challenging than ever. This OnPoint explores certain strategies to bridge valuation gaps, including classic earn-out mechanisms, the increasing prevalence of toe-hold and minority positions and other valuation trends observed in the Asian markets in the early days of the Coronavirus outbreak.
Economic uncertainty as a result of the COVID-19 pandemic has caused a decline in trading prices for debt and equity securities and liquidity and covenant compliance issues. BDCs and CEFs, and their affiliates, can repurchase shares of their securities at a discount to real value in various ways to take advantage of lower trading prices or to restructure their liabilities. Issuers and their affiliates should consider the potential pitfalls of repurchase transactions.
COVID-19 has presented novel issues for public companies, including business development companies, with respect to their disclosure obligations under federal securities laws. This OnPoint discusses recent SEC relief in connection with COVID-19, and provides guidance regarding public companies’ ongoing disclosure obligations.
Our lawyers discuss structures used by private equity funds to take advantage of investment opportunities in the current environment, and some of the practical and legal considerations involved in forming such vehicles.
We discuss how the decline in the trading prices of bank loans and corporate bonds resulting from the COVID-19 pandemic may present opportunities for companies to deleverage their balance sheets by buying back their own debt and for PE sponsors to shore up the stability of their portfolio companies while maintaining their liquidity by reducing or restructuring debt within their investment portfolio.
The COVID-19 crisis has raised questions on whether insurance will help businesses mitigate losses suffered as a result of the pandemic. This OnPoint looks at the position in the UK and the U.S., with a particular focus on business interruption insurance.
Since the UK's mandatory lockdown at the end of March, landlords and tenants have been considering the implications for commercial leases and, in particular, obligations relating to the payment of rent. This OnPoint takes a closer look at some issues for both parties and provides an overview of the recently introduced Coronavirus Act 2020 in the context of business leases.
This alert focuses on notable features of Dubai's DIFC Insolvency Law, while also looking at the recent temporary suspension of the wrongful trading rules introduced as a result of the COVID-19 pandemic.
The UAE overhauled its bankruptcy regime on December 29, 2016 with the introduction of the Bankruptcy Law. Until now, the Bankruptcy Law has only been anecdotally applied to a fairly small number of low profile insolvencies, but is now likely to be tested on a larger scale both in terms of numbers and size of debtors affected by insolvency proceedings. This alert is a refresher of some of the key features of the Bankruptcy Law and potential areas of concerns for debtors, their directors and their shareholders.
Due to the uncertainty caused by COVID-19, the European Commission has decided to postpone the Mandatory Disclosure Regime deadline by three months. While the EU's proposal is welcome, and will relieve some of the immediate pressure upon organizations and their advisers, many will consider the extension period insufficient.
With an estimated one quarter of the world's population in lockdown, the COVID-19 coronavirus crisis is likely the transportation industry's greatest challenge yet. This OnPoint explores the recent developments as well as potential opportunities and strategies for companies operating in this sector.
In the short term, the FCA will dedicate its resources to combatting the myriad of issues that are and inevitably will be caused by COVID-19. Firms can expect continued scrutiny in respect of the regulatory areas set out in the article below and where failings are found, enforcement action may be likely to follow. It would be prudent for firms to assess how well they are performing in each of these areas.
Corporates and asset managers will need to update their financial crime risk assessments as a result of COVID-19 and take particular preventative steps to mitigate the risk of related misconduct. Companies bidding for EU funded work should take particular care to ensure that the business-specific risks of operating in the current environment are identified and incorporated into their compliance and mitigation steps.