Distressed Acquisitions – Key Considerations

By Shon Glusky and Matthew Silverstein on April 21, 2020 Posted in Coronavirus, Mergers & Acquisitions

The current COVID-19 pandemic is causing an unprecedented negative impact on businesses around the globe in nearly every sector of the economy. Both the US Government as well as Foreign Governments have and will continue to provide short- and long-term financial support to these businesses. However, this financial assistance will not be available to every business, nor will it be adequate in all instances to offset decreased revenue resulting directly and indirectly from the pandemic. As a result, many businesses will be unable to accurately forecast and will not have the necessary liquidity to ride out the pandemic, and will seek solutions to preserve value for their stakeholders, including through the pursuit of a sale. Both strategic purchasers and institutional investors will have opportunities to purchase these businesses (or certain related assets) either through a regular sale process or under the supervision of a bankruptcy court. Due to the nature of these sales, a number of additional issues arise that potential purchasers should bear in mind. Continue Reading

Exchange Relief: NYSE Provides Partial Waiver for Shareholder Approval of PIPE Transactions; Nasdaq Provides Relief Regarding Continued Listing Requirements

By Alexander Yarbrough and Richard A. Friedman on April 21, 2020 Posted in Coronavirus

The New York Stock Exchange (NYSE) and The Nasdaq Stock Market LLC (Nasdaq) both took action this month to provide issuers with much needed relief in response to the economic downturn caused by the COVID-19 pandemic. We expect that these measures will provide needed flexibility to many issuers, especially smaller reporting companies who have recently experienced significant stock price volatility and are in need of capital.

IRS Issues FAQs Addressing Deferral of Employment Tax Deposits

By Claudia Hinsch on April 20, 2020 Posted in Coronavirus

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) allows employers to defer the deposit and payment of their share of Social Security taxes (OASDI, but not Medicare) and self-employed individuals to defer a portion of their self-employment taxes. The IRS recently published FAQs addressing specific questions about deferral of these taxes. Continue Reading

Updated IRS Guidance Addressing COVID-19 Relief Employer Tax Credits

By Martin Smith, Michael Chan, Dmitriy Chelnitsky, Claudia Hinsch and Michael Weisshar on April 20, 2020 Posted in Coronavirus

The IRS recently published guidance on the new refundable employment tax credits available under the Families First Coronavirus Response Act (the “FFCRA”) and the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). Continue Reading

Primary And Secondary Market Corporate Credit Facilities

By Stephen Cohen on April 17, 2020 Posted in Coronavirus

On April 9, 2020, the Federal Reserve issued a term sheet for each of the Primary Market Corporate Credit Facility (“PMCCF”) and the Secondary Market Corporate Credit Facility (the “SMCCF”). Under the PMCCF and the SMCCF, the Federal Reserve Bank of New York (“Reserve Bank”) will commit to lend to a special purpose vehicle (“SPV”) on a recourse basis. Under the PMCCF, the SPV will (i) purchase qualifying bonds as the sole investor in a bond issuance; and (ii) purchase portions of syndicated loans or bonds at issuance. Under the SMCCF, the SPV will purchase in the secondary market eligible individual corporate bonds as well as eligible corporate bond portfolios in the form of exchange-traded funds (“ETFs”). The Reserve Bank will be secured by all the assets of the SPV. Continue Reading

Sheppard Submits Comments to Main Street Loan Program

By Peter Carson, Elliot Hinds, David D'Amour, Andrew Felner, Jordan Hamburger, Charbel Lahoud, Thomas Leo, Colleen McDonald, Jonathan E. Meyer, Michael Ragan, James Ritter, Kevin Ryan, Nikole Snyder, Bijal Vira and William Wyatt on April 17, 2020 Posted in Coronavirus

On Thursday April 16, Sheppard Mullin submitted comments to the Federal Reserve about its terms sheets for the $600 Billion Main Street Loan Program. These comments raise and explore numerous important questions that the Fed and Treasury will necessarily need to grapple with to make the Main Street programs successful. We believe that these comments together with our comparative chart of the two Main Street loans being offered will help readers gain an initial understanding of how the Main Street Loan Program may work with companies’ existing debt and operations. We will provide updates when new information is released about the Main Street program. Continue Reading

COVID-19 Related Expenses

By Judith Fiorini, John Crisp and Ryan Brenner on April 14, 2020 Posted in Coronavirus, Tax

Businesses, employees, and other taxpayers are incurring new and often significant expenses as they adapt and respond to the changes brought on by the COVID-19 pandemic. Several tax provisions may help to mitigate the impact of those costs, including new provisions enacted as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act as well as certain previously existing provisions of the Internal Revenue Code (“Code”). Continue Reading

Main Street Lending Program Summary

By Peter Carson, Elliot Hinds, Taylor Ashton and Bobby Chipman on April 10, 2020 Posted in Coronavirus

5-1-2020 Update: We plan to provide an update later today to reflect the Fed’s April 30, 2020 release of the new terms sheets and FAQs.

On April 9, 2020, the Federal Reserve took additional actions to provide up to $2.3 trillion in loans to support the economy. This blog focuses on the Main Street Lending Program, which is a $600 billion loan program, that will include $75 billion capitalized by the Treasury Department under the $454 billion Congressional appropriation of Section 4003(b)(4) of Title IV of the CARES Act. The loans will target mid-sized companies, defined as having less than 10,000 employees or $2.5 billion in 2019 annual revenue, and will be made by banks and other eligible lenders, with the government then purchasing 95% of the lenders’ interest in the loans.

UPDATED: Checklist for CARES Act Assistance to Companies

By Jonathan E. Meyer, Nikole Snyder, Michael Ragan and Daniel Alvarado on April 10, 2020 Posted in Coronavirus

As companies continue to review the CARES Act to determine what assistance may be available to them, we have updated our user-friendly checklist to assist them in getting a quick sense of what works for them.

Virtual and Hybrid Shareholder Meetings in the Era of COVID-19: What Public Companies Need to Know

By Alexander Yarbrough and Jordan Hamburger on April 9, 2020 Posted in Capital Markets, Coronavirus, Securities and Exchange Commission

With annual reports on Form 10-K publicly filed and first quarter earnings releases getting underway, proxy season – the annual practice of filing and distributing proxy statements, reserving meeting venues and courting shareholders – is now in full effect. Continue Reading

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