COVID-19

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[Update: This is an updated version of an article published to Sheppard Mullin’s Finance and Bankruptcy Blog on June 5, 2020]

On June 5, 2020, the U.S. President signed into law the Paycheck Protection Program Flexibility Act (PPP Flexibility Act or Act) to provide businesses with greater flexibility and more time to maximize forgiveness of loans received under the Paycheck Protection Program (PPP), as enacted under the Coronavirus Aid, Relief, and Economic Security Act (as amended, supplemented or otherwise modified from time to time, including, without limitation, by the Paycheck Protection Program and Health Care Enhancement Act, applicable federal regulations and interpretive guidance issued by the SBA and Treasury, the CARES Act).  The PPP Flexibility Act has been further supplemented by the (i) Joint Statement, issued on June 8, 2020 by U.S. Treasury Secretary Steven T. Mnuchin and Small Business Administration (SBA) Administrator Jovita Carranza (the Joint Statement) and (ii) Seventeenth Interim Final Rule[1], issued by the SBA on June 11, 2020.
Continue Reading [UPDATED] Paycheck Protection Program Flexibility Act: Major Changes to the PPP

On May 4, 2020, the Securities and Exchange Commission (“SEC”) issued a temporary final rule easing some restrictions on small businesses seeking to raise capital pursuant to Regulation Crowdfunding (“Reg CF”).  The SEC made the move in response to feedback from its Small Business Capital Formation Advisory Committee and other outreach conducted by SEC staff regarding the industry’s urgent need for expedited access to capital while maintaining investor protections as the COVID-19 pandemic persists.
Continue Reading SEC Offers Limited Rule Relief to Spur Small Business Crowdfunding During Pandemic

On May 12, 2020, speaking at the Securities Enforcement Forum West 2020, Steven Peikin, the co-Director of the Securities and Exchange Commission Enforcement Division, provided an overview of the division’s activities over the last several months as it has responded to the challenges created by the COVID-19 pandemic.  The Division is actively monitoring issuers and market participants for any sign of abuse of the situation, swiftly implementing interim trading suspensions where the possibility of such abuse is identified, and filing enforcement actions in record time where it determines such abuse has occurred. …
Continue Reading SEC Co-Director of Enforcement Outlines Division’s Response to COVID-19

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 Distressed Acquisitions – Key Considerations

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

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 Primary And Secondary Market Corporate Credit Facilities

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 Sheppard Submits Comments to Main Street Loan Program

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 COVID-19 Related Expenses

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.…

Continue Reading Main Street Lending Program Summary

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