Practical Guidance for Businesses Dealing with Coronavirus
Steven A. Migala • March 11, 2020
While the world grapples with the emergence of the novel coronavirus COVID-19, we offer a non-exhaustive list of practical steps that our business clients should consider taking now:
1. Adopt a Coronavirus Action Plan:
If an employee becomes sick or if there is exposure to those of a business’ customers with a potential infection, how will the business respond? Start planning for this now. For banks, some older regulatory guidance dealing with pandemics remains useful (see below). Other regulated industries should consult with their regulators.
- FFIEC Interagency Statement on Pandemic Planning (December 2007)
- Interagency Advisory on Influenza Pandemic Preparedness (March 2006)
2. Reassure Customers and Staff:
Businesses can reassure their customers and employees that they are using cleaning personnel equipped with proper cleaning and antiviral products to properly disinfect the premises on a regular basis. Businesses should review their cleaning procedures and upgrade them as necessary. Employees should be provided with their own products and trained on how to clean high-use surfaces and equipment.
3. Closing Offices:
Some businesses have closed offices temporarily as a result of potential exposure. If you are in a regulated industry, please consult with your regulator to determine whether any express approvals are required or for the proper procedure to follow. Please consult your counsel or give us a call if you need assistance with this.
4. Business Interruption Insurance:
As mentioned in our prior article
on the legal implications of coronavirus, businesses should review their business interruption coverage, if any. Some insurers may start adding exclusions for losses arising out of COVID-19. Consult with your insurance agent to see if any such exclusion is being added, then dispute it.
5. Evaluate Customers And Customer Retention:
Evaluate your customers to gauge their exposure to industries likely to be impacted by COVID-19, like the transportation, travel and commodities industries, and communicate regularly with them. Businesses may want to consider working with customers who are directly affected by the coronavirus, such as by extending credit terms, offering payment plans and waiving penalties. Doing so may build goodwill and prevent a loss of the customer relationship and expected future revenue from it.
6. Mergers & Acquisitions:
For transactions being negotiated or not yet closed, counsel should review their clients’ representations and warranties carefully, paying particular attention to any material adverse effect provisions and definitions to carve out the effects of COVID-19.
7. Existing Contracts:
Businesses should review our prior article
for issues to look for in reviewing their existing contracts, including the time and manner of performance and force majeure clauses that may temporarily excuse performance.
8. Refinance:
Businesses who remain confident should consider capitalizing on the Federal Reserve’s recent rate cut to refinance or issue new debt to raise capital.
We are here to serve our clients and assist them in navigating these uncertain times. Feel free to contact us if you need assistance with any of these steps or if you want to further discuss what actions you and your business should be taking now.
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