The rapidly evolving coronavirus (COVID-19) crisis is creating a plethora of unique business and legal challenges across nearly every sector of our economy.  Our multi-disciplinary COVID-19 Taskforce has been vigilantly monitoring the crisis and proactively analyzing the various, often seldom invoked, legal issues implicated by the quickly evolving health emergency. Please see our listed resources below, including links to blog posts, articles, and links to Taskforce member biographies.  These resources are meant to provide clients with a framework by which to evaluate and respond to these issues as quickly, and knowledgeably, as possible.

The topics below are only some of the myriad of potential legal issues posed by the spread of COVID-19.  If you have any questions about the issues addressed or otherwise, please do not hesitate to reach out to us. We will continue to update our resources as more information regarding COVID-19 becomes available.    

For more information, please contact Bilzin Sumberg's COVID-19 Taskforce.

EMERGENCY ORDERS: Latest News & Updates

• State of Florida Issues Interpretation Allowing New Permit and Development Order Extensions Based on COVID-19 State of Emergency - March 23, 2020.

 

• Some Jurisdictions Granting Automatic Extension: 

As information surrounding COVID-19 continues to rapidly evolve, so do the responses from South Florida counties and local municipalities. Over the past two weeks, Miami-Dade County issued a State of Emergency followed by numerous emergency orders directing the closure of all parks, beaches, and recreational facilities, along with all non-essential retail and commercial establishments. Other emergency orders prohibit the use of common use mopeds, bicycles, and other shared mobility devices such as scooters. Municipalities have followed suit in issuing similar orders reiterating the closure of non-essential services and announcing changes to their services such as limitations on in-person visits to city departments and new procedures for permit processing.     

Stay up to date on local government orders, services, and how they may impact you and your business through the links below: 

• Miami-Dade County
• Broward County
• Palm Beach county
• City of Miami
• City of Miami Beach
• City of Coral Gables
• Aventura
• Doral
• Miami Gardens 

• Emergency Public Contracting Procedures, Part 1: Miami-Dade County - March 18, 2020.

 

• Emergency Public Contracting Procedures, Part 2: State of Florida - March 27, 2020.

Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”)

• Navigating the Coronavirus Aid, Relief and Economic Security Act (CARES Act) Webinar, which includes a discussion about the business provisions of the largest U.S government financial relief package in history. Includes practical ways the CARES Act may be relevant to certain businesses. More specifically, speakers explore loans, advances, and other financial assistance to small businesses (500 employees or less), loans, loan guarantees and investments in mid-size and larger business, forbearance provisions that may affect your business and tax relief for businesses. - April 1, 2020

 

• SBA Issues Interim Final Rules for Title I of CARES Act Paycheck Protection Program; Treasury Issues Instructive Guidelines for Loans under Title IV - April 3, 2020

 

• Payment Protection Program and Economic Injury Disaster Loan Update – April 23, 2020

 

• Federal Reserve Announces Funding for Main Street Lending Program and Other Actions to Bolster the Economy - April 9, 2020

 

• Main Street Lending Program Expansion - May 1, 2020

 

• Affordable Housing - Incentives for Owners of Developments that Do Not Raise Rents - May 5, 2020

CORPORATE: Disruption to Commercial Contracts

• Review Force Majeure and Material Adverse Change Clauses: Many executory commercial and other agreements contain so-called "force majeure" and "material adverse change" ("MAC") clauses that under certain circumstances may excuse performance of a party's obligations, either entirely or temporarily. The World Health Organization has officially declared the recent coronavirus outbreak a pandemic, which may trigger these clauses. Whether or not the coronavirus pandemic triggers these clauses depends on the wording of the clause and applicable state law. Given the severe consequences of delaying or waiving contractual obligations due to the impact of these clauses, a thorough review of the specific clause, the particular circumstances, and legal precedents is imperative. If you are negotiating an important agreement currently, then the inclusion of these clauses may be prudent depending on the circumstances. See also: The Wrath of God and its Impact on Contracts: "Force Majeure" and "MAC" Clauses - March 12, 2020.

 

• Hospitality: The hospitality market in the U.S. will be negatively impacted and group and transient business will decline, especially in major cities, all of 2020 will be negatively impacted. This massive occupancy issue will drive rates way down and impact the ability of borrowers to make debt service payments.  As a precaution, hotels should review master servicer agreements to make sure cash management accounts are set up properly, and as a company, preliminarily decide from a business standpoint which funds to release from the cash management system to cover operating expenses. 

LITIGATION: Other Potential Business Liabilities

• An increase in insurance-related lawsuits: “Business disruption insurance” claims may potentially be available to many companies, along with other issues that will give rise to insurance coverage disputes. See also: Importance of Reviewing Insurance Policies Amidst COVID-19- March 18, 2020.

 

• Class action and “mass action” lawsuits: Employee, investor, and customer suits seeking class-action status all may spike as a consequence of coronavirus.  Employees may complain of inadequate workplace safety or worker protection.  Investors may cite a lack of preparedness for (or inadequate responses to) the virus as the cause of a “larger than market average” decline in stock value.   Customer claims can be exemplified by a current suit seeking class-action status against the maker of Purell hand sanitizer – that suit alleges that the company exaggerates the product’s ability to prevent illness. 

 

• Data Privacy: The anticipated large-scale increase in employees working remotely raises the possibility of increased threats to data security and privacy.  Employers will need to remain vigilant in assessing these risks and responding to instances of compromised data.  Private health-related information will also likely need to be communicated, compiled and stored with increasing frequency during the pendency of the coronavirus threat, also raising the risk of unintended sharing or exposure of such data to parties not entitled to have access to it.

ENVIRONMENTAL

• In light of this uncertainty, we remind property owners, lenders, and managers, as well as landlords and tenants, to identify both potential environmental risks and valuable environmental assets associated with a property or tenant. Identifying these potential liabilities and assets now will ensure that risks can be managed and valuable entitlements can be preserved so as not to negatively affect the value of their assets. See also: Environmental Considerations: Identifying Risks and Protecting Assets in Turbulent Times - March 23, 2020. 

PRIVATE CLIENTS: Transfer Tax Planning

• Basic Estate Planning: Now more than ever we need to focus on our well being and that of our families.  As part of this process, you should review your current estate planning documents to ensure that you at least have your basic documents in order (Wills, Revocable Trusts, Powers of Attorney, beneficiary designations and health care directives) and that these documents reflect your current wishes.  In uncertain times such as these, peace of mind may be garnered from being sure that long-term planning strategies and goals are in place. See also: Impact of COVID-19 on Estate Planning - March 13, 2020.

 

• Efficient Wealth Transfer Strategies: Given the volatility of the financial markets, depressed asset values and historically low interest rates you should consider this an opportune time to transfer wealth to your intended beneficiaries.  Currently, each individual is allowed an $11,580,000 exclusion from estate and gift tax for combined lifetime and testamentary transfers (which amounts to $23,160,000 for married couples).  Generation-skipping transfer tax is assessed at the same level.  Taxable gifts in excess of these amounts are taxed at 40%.  Depressed asset values present an opportunity to make transfers of assets at these current depressed values.  Additionally, market volatility increases the likelihood that the value of transferred assets may be further discounted.  When assets eventually rebound, and these transferred assets increase in value, all such appreciation will escape transfer taxation.  Many estate planning strategies are tied to federally mandated interest rates - the lower the interest rates, the greater the chances that the planning strategies will be successful and the more value that is likely to be transferred to younger generations.  These factors combined make these uncertain times ripe with opportunities to implement various estate planning strategies.  

 

• The Unintended Consequences of Travel Restrictions for Foreign Individuals - March 27, 2020

 

• How To Make Your Estate Plan Amid The Coronavirus Pandemic - March 27, 2020

 

• New and Important International Tax Issues Related to the Coronavirus Pandemic - April 9, 2020
  

   

• The Effects of COVID-19 on Estate Planning - April 14, 2020

 

• How U.S. Real Estate Investors May Reduce Taxable Income in the wake of COVID-19 - April 20th
  
  

How Bilzin Sumberg Can Help

• Advise on business continuity planning, including contractual review.
• Assist clients facing supply chain disruptions and/or failure to meet production or sale quotas.
• Provide guidance on applicable federal, state, and local regulations and assist with navigating multi-agency interactions.
• Advise high net worth individuals and family offices on unique wealth planning opportunities in light of the current financial market shifts.
• Analysis of hotel exposure in light of cancellations and deterioration of financing within the industry.
• Assist the food and beverage industry and other consumer product companies in assessing liability exposure and legal risk by canceling outstanding purchase orders and moving production to other countries, as well as the development and implementation of appropriate and effective disease containment and maintenance policies. See also: The Impact of COVID-19 on Food Safety and the Food Industry - March 11, 2020. 
• Provide guidance on the applicable regulatory restrictions on the collection and uses of personal data, including sharing of private health-related information, and possible ways to mitigate risks relating to such collection and use.

Additional Resources

• Florida’s Small Business Emergency Bridge Loan Program
• U.S. Small Business Association Disaster Loan Assistance
• Interim Final Rule
• SBA Size and Affiliation FAQs 
• Revised SBA Application Form of the PPP as of April 3, 2020
• Guidance on the Essential Critical Infrastructure Workforce 
• Official COVID-19 Site of the Centers for Disease Control and Prevention
• World Health Organization
• U.S. Department of State

This information is intended to inform our clients and other friends about legal developments, including recent decisions of various municipalities, legislative, and administrative bodies. Because of the rapidly changing landscape related to COVID-19, we intend to send out regular updates. The information we provide is not intended as legal advice and viewers/readers should not rely on information contained in these materials to make business or legal decisions. Before making any legal decisions, consult your lawyer. Please do not hesitate to contact us should you need assistance responding to the many issues which have arisen, and will continue to arise, out of this situation.

Webinar: Force Majeure Clauses and Other Potential Options to Excuse Contractual Performance in the Face of COVID-19

For access to the video, please email communications@bilzin.com.

Webinar: Navigating the Coronavirus Aid, Relief and Economic Security Act (CARES Act)

For access to the video, please email communications@bilzin.com.

Webinar: Not For Profit Legal Challenges and Opportunities in the Wake of COVID-19

For access to the video, please email communications@bilzin.com.