Impacts of Covid-19 on Closing M&A Transactions

The World Health Organization declared the outbreak of the novel coronavirus disease (COVID-19) a pandemic, prompting numerous public and private organizations and agencies to accelerate their contingency plans so as to mitigate continued transmission. The responses to this public health concern have also introduced additional uncertainty and complexities into the process and administration of merger and acquisition transactions. Below is a list of considerations for pending and prospective acquisitions during this time of uncertainty that could help mitigate potential adverse effects. Continue Reading

Frustration of Purpose – Do I Have a Defense?

The COVID-19 (“coronavirus”) public health crisis has caused unprecedented business disruptions and uncertainty for existing contractual obligations.  While many are focused on whether a force majeure clause will be triggered by the recent events, contracting parties should also consider the doctrine of “Frustration of Purpose.” Under California law, the frustration of purpose doctrine may be invoked where:

  1. Performance remains possible;
  2. but the fundamental reason of both parties for entering into the contract has been frustrated by an unanticipated supervening circumstance; and
  3. it destroys substantially the value of performance by the party standing on the contract.[1]

However, to excuse nonperformance of a contract on the ground of commercial frustration, the frustration must be so severe or substantial that it is not fairly to be regarded as within the risks that were assumed under the contract.[2] Continue Reading

Insurance Considerations for Companies Impacted by Coronavirus

The World Health Organization has labelled novel coronavirus (COVID-19) a pandemic and the global number of confirmed cases of COVID-19 has surpassed 150,000.  Companies suffering losses that they believe are attributable to COVID-19 or desiring to seek insurance to potentially cover losses resulting from COVID-19, should discuss these issues with their insurance broker(s) and risk manager(s) to assess the extent of coverage available.  While the exact legal duties owed by insurance brokers to their clients vary from state-to-state, brokers are typically required to use at least reasonable care, diligence and judgment in procuring the insurance coverage requested by an insured. Continue Reading

SEC Proposal to Modernize Financial Disclosure Requirements in Regulation S-K

The Securities and Exchange Commission (the “SEC”) recently proposed amendments to modernize and simplify specific financial disclosure requirements in Regulation S-K as part of the SEC’s Disclosure Effectiveness Initiative. The proposed amendments are designed to eliminate duplicative disclosures and modernize, in particular, Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”). Continue Reading

Coronavirus and Considerations for Publicly Traded Companies

The coronavirus (COVID-19) outbreak has impacted publicly traded companies that have to provide information to trading markets, shareholders and to the Securities and Exchange Commission (SEC) in a number of ways. The SEC has been particularly active in acknowledging the challenges that the outbreak poses to such companies and has provided conditional relief and has issued guidance as the outbreak has developed. The SEC Enforcement Division is also on high alert for COVID-19 scams. Continue Reading

The Impact of Coronavirus on Supply Chain

The global Coronavirus Disease 2019 (“COVID-19” or “coronavirus”)  outbreak has caused supply chain disruptions to businesses around the world.  From delayed production to halted factory operations and slim shipping and freight options, the coronavirus costs keep mounting for businesses facing huge losses.  Developing a cogent response to the outbreak can be extremely challenging, given the scale of the crisis and the rate at which it is evolving.  Sheppard Mullin has mobilized a task force to assist clients address potential legal issues that may arise with respect to their supply chain or contracts. Continue Reading

Coming to America…to Wait Out the Coronavirus — Visa & Immigration Considerations

With the growing concern about Coronavirus Disease 2019 (“COVID-19” or “coronavirus”) some foreign nationals who live outside the U.S. have decided to fly to the U.S. and wait out the crisis.  This article discusses the related visa and immigration issues, and what U.S. Customs and Border Protection requires to admit someone into the U.S. Continue Reading

What Employers Need To Know To Prepare For Coronavirus

As the number of confirmed positive cases of Coronavirus Disease 2019 (“COVID-19” or “coronavirus”) in the U.S. continues to rise, employers must prepare for issues that will inevitably arise as the virus spreads.  While the Center for Disease Control (“CDC”) currently advises that “most people in the United States will have little immediate risk of exposure,” it is prudent for employers to evaluate their organizations’ current policies and practices in the event a major outbreak occurs.  Some issues to consider include the following:

Continue Reading

DHS Issues New I-9 Form — Required by May 1 for New Hires and Reverifications

DHS recently issued a new I-9 form. This new version is mandated starting May 1. The old form expired last year and DHS had temporarily extended its validity. The new form is essentially the same as the older version. DHS made minor technical updates to the instructions. All of the pre-existing I-9 rules and regulations remain intact. The new I-9 form can be found at:  https://www.uscis.gov/i-9 Continue Reading

California State Court Declines to Expand Standing for Claims Under 1933 Act

In Jensen v. iShares Trust, 2020 Cal. App. LEXIS 61 (Cal. App. Jan. 23, 2020), a rare state court decision addressing claims under the Securities Act of 1933 (“1933 Act”), the California Court of Appeal rejected plaintiffs-appellants’ attempt to evade the “tracing” requirement under Section 11, 15. U.S.C. § 77k, which provides standing only to those plaintiffs who can trace their shares purchased in a secondary market transaction to an initial offering made under a misleading registration statement.  Appellants argued that they were not subject to the tracing requirement because the respondent, an open-end management investment company, also was governed under the Investment Company Act of 1940 (“ICA”), 15 U.S.C § 80a, et. seq., which appellants argued extends standing to purchasers no matter how or from whom their shares were purchased.  The Court rejected the argument, unequivocally reaffirming that the 1933 Act is focused only on initial public offerings and other primary market transactions, and so any claims brought thereunder must satisfy its strict standing (i.e., tracing) requirements. Continue Reading

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