Businesses Should Take These Steps to Navigate Uncertainties During the COVID-19 Pandemic

The COVID-19 (coronavirus) pandemic has forced businesses throughout the Gulf Coast to adjust rapidly to maintain operations and fulfill contractual obligations. Local and national governmental authorities have imposed unprecedented travel and gathering restrictions (as well as forced business closures) that will affect companies in every industry. Since these measures will affect each industry differently, companies will need to determine whether force majeure provisions in various contracts may excuse or delay performance due to the pandemic. In addition, companies will need to determine whether to file insurance claims for losses resulting from business interruptions.

Rest assured, Phelps is prepared and committed to our community’s legal needs as the COVID-19 pandemic escalates. Below are steps and precautionary measures that Phelps can assist your business with during these uncertain times:

• Review your leases, vendor contracts, service contracts and supply contracts for applicable force majeure provisions, essential service interruption provisions or similar provisions.
• Analyze applicable insurance policies and corresponding contractual provisions, including business interruption and contingent business interruption insurance.
• Review employment contracts to ensure that precautionary measures do not violate obligations of your business to your employees.
• Examine applicable operating agreements and other corporate documents to determine who can take certain actions (manager actions, majority owner actions, unanimous owner actions) such as requiring capital contributions from owners or entering into short term loans.
• Review existing loan agreements, mortgages and/or lines of credit to determine whether the pandemic will affect your obligations and liabilities as a borrower.
• Determine immediate and long-term cash flow needs and whether access to SBA loans, term loans or lines of credit make sense for your company during the pandemic.
• Create a strategy to make sure your company complies with new and ever-changing restrictions and requirements imposed by national, state and local governmental authorities.

Although the coming weeks and months will be uncertain, taking precautionary measures now will provide the flexibility needed to ensure that your business survives these tough times.

Phelps has and will continue to adapt to these complex and changing circumstances and is prepared to assist our clients to do the same.

Please contact Bart Bacigalupi or Phil Claverie, Jr. if you have any questions regarding these considerations.