COVID-19 Coronavirus: Finance
In this OnPoint, we consider practical issues affecting UK developers, contractors and funders of development projects balancing practical implications of the COVID-19 crisis with the need to progress works and comply with legal obligations in development, construction and loan agreements.
Read our guidance: COVID-19 Issues Affecting Construction Contracts and Development Projects (UK) - July 16, 2020
Under the Main Street Lending Program, three new loan facilities will be created that will enable lending to small and medium-sized businesses by eligible lenders. While the Program is not yet open for loan applications, the following is a Q&A summary addressing questions that prospective borrowers might have.
Read our guidance: Updated Summary of the Federal Reserve Main Street Lending Program (U.S.) - June 10, 2020
Although the loan industry has long looked at loans as being obligations that arise in a commercial lending relationship, the law supporting this view has been more than just a little unclear...until now. A New York district court's decision not to classify syndicated loans as securities in Kirschner is especially important in the context of the current COVID-19 crisis, as a decision subjecting syndicated loans to securities regulation could have chilled this market at a time when many borrowers have a heightened demand for liquidity.
Read our guidance: Some Good News for the Loan Industry—Loans Are Not Securities (U.S.) - June 1, 2020
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.
Read our guidance: UK Government Funding and Other Liquidity Options (UK) - May 25, 2020
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.
Read our guidance: Mezzanine Foreclosures in the Time of Coronavirus: Chapter 2 (U.S.) - May 12, 2020
The Federal Reserve Bank of New York released FAQs regarding the Primary Market Corporate Credit Facility (PMCCF) program, providing greater detail and further clarification of its March 23, 2020 announcement. In addition, an issuer participating in the PMCCF may not also participate in any of the three facilities offered under the Main Street Lending Program, which represents efforts by the Federal Reserve to support lending to businesses that had been in sound financial condition prior to the COVID-19 pandemic.
Read our guidance: Federal Reserve Releases FAQ for the Primary Market Corporate Credit Facility (PMCCF) (U.S.) - May 8, 2020
A recent New York County Supreme Court decision has temporarily halted a mezzanine UCC foreclosure sale, and the implications of the decision are significant for mezzanine lenders who are considering their enforcement options with respect to property located in New York and beyond.
Read our guidance: Mezzanine Foreclosures in the Time of Coronavirus (U.S.) - May 5, 2020
The Federal Reserve Bank and the U.S. Department of the Treasury announced preliminary details for the Main Street Lending Program (MSLP) on April 9, 2020. Under the program, borrowers must use commercially reasonable efforts to maintain payroll and retain employees during the term of the MSLP loan. Those borrowers that have already laid off or furloughed workers as aresult of the disruptions from COVID-19 remain eligible to apply for these loans.
Read our guidance: Summary of the Federal Reserve Main Street Lending Program (U.S.) - May 5, 2020
In the midst of the COVID-19 pandemic, market participants have faced a gauntlet of difficult circumstances brought about by defaults and downgrades of assets within current CLO portfolios. While every transaction is different, and specific answers will depend on the fine print in the underlying documents, this OnPoint is intended to serve as a general guide and refresher as to the impact of distressed assets and debt tranches under a typical CLO indenture.
Read our guidance: CLO Indenture Update (U.S.) - April 29, 2020
Finance co-chair Rick Jones opines on the effects of the COVID-19 pandemic on borrowers, ratings agencies and the overall health of the economy in his latest post on the Crunched Credit blog.
Read Rick Jones' blog post: Playing with Broken Toys in Coronavirus Land - April 19, 2020
The Primary Market Corporate Credit Facility (PMCCF) program is a new program that was included as part of the CARES Act to address the liquidity and financing needs of businesses facing uncertainties as a result of the COVID-19 pandemic through purchases of eligible corporate bonds and syndicated loans. Our lawyers can assist you in evaluating whether the program is right for your business and with requesting PMCCF financing for eligible corporate bonds or syndicated loans.
Read our guidance: Federal Reserve Releases Updated Term Sheet on the Primary Market Corporate Credit Facility (PMCCF) (U.S.) - April 15, 2020
The restriction of both eligible borrowers and eligible ABS issuers to U.S. companies with significant operations in and a majority of their employees in the United States effectively excludes most investment funds from becoming eligible borrowers, and more seriously excludes ABS that must be issued by a bankruptcy remote special purpose vehicle from becoming eligible collateral.
Read our guidance: Federal Reserve Releases Updated Term Sheet on the Term Asset-Backed Securities Loan Facility (TALF) (U.S.) – April 10, 2020
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.
Read our guidance: UK Government Funding and Other Liquidity Options (UK) – April 7, 2020
While the full scope of the potential impact of COVID-19 on financial covenant calculations and other purposes within loan agreements can only properly be assessed on a deal-by-deal basis, it is still possible to identify some of the issues that will need to be considered as part of that analysis.
Read our guidance: The Potential Impact of the COVID-19 Coronavirus on EBITDA and Financial Covenant Calculations in Loan Agreements (UK) – April 6, 2020
On March 23, 2020, the Federal Reserve Bank announced the establishment of the Term Asset-Backed Securities Loan Facility (TALF) to "support the flow of credit to consumers and business" by facilitating the issuance of asset-backed securities (ABS) and improving the market conditions for ABS generally. Although the full terms, conditions and potential size and scope of the TALF program are still not finalized at this time, the success of the Legacy TALF Program during the 2008 financial crisis should create a sense of optimism by increasing liquidity and encouraging investment into the structured finance market.
Read our guidance: Federal Reserve Establishes Term Asset-Backed Securities Loan Facility (TALF) (U.S.) - March 26, 2020
For some industries, the immediate loss of revenue is obvious. For other industries, a loss in revenue is likely linked to the disruptions in their supply chain. The expectation is for a significant number of businesses to be negatively impacted by this virus, while it remains to be seen exactly what that will look like.
Read our guidance: What Could It Mean for Your Portfolio Company’s Compliance With Its Loan Agreements? (UK and Europe) - March 24, 2020
Businesses will need to fight to stay afloat as the repercussions of the virus hit hard. Many of these businesses will have existing financing arrangements in place, and the loan agreements for those arrangements will contain provisions impacting what rights their lenders have in reacting to this crisis.
Read our guidance: COVID-19 as an MAE in English Law Loan Agreements (UK) – March 23, 2020
As the COVID-19 health crisis deepens and increasingly rankles the financial markets, private equity sponsors should take the time to review their portfolio companies' credit facilities and determine what flexibility they may have if their performance is adversely affected.
Read our guidance: Action Items for Private Equity Sponsors under Their Portfolio Companies' Credit Facilities (U.S. and Europe) - March 16, 2020