In the wake of the coronavirus (COVID-19) outbreak, which has had an unprecedented impact on how businesses operate around the world, Michelman & Robinson, LLP has announced the formation of an interdisciplinary risk mitigation response team to assist companies across sectors adversely affected by the pandemic.

Potential Problems Abound

These are unprecedented times. News about coronavirus and its spread is constant and mostly negative: large public gatherings are banned, restaurants and bars closed, sporting event canceled, and workers asked to work from home or otherwise facing furlough. As it relates to businesses, coronavirus presents multiple challenges. On the employment front, questions range from decisions regarding legal and moral obligations to maintain a safe workplace, to the implementation of employee screening, leave and telecommuting policies.

In terms of operations, business continuation concerns are acute. Supply chain interruptions, transportation problems, or the need to quarantine workforces may lead to an inability to meet contractual deadlines, which could result in claims of contract breach or the need to renegotiate agreements. Likewise, companies that are shuttered or unable to operate as usual may elect to file business interruption claims with their insurers. In addition, financial concerns or pressures may move businesses to pull from existing credit lines (discussed below), seek new avenues of financing, or reduce costs by renegotiating existing obligations (e.g., vendor contracts, financing agreements and leases, etc.).

Coronavirus Risk Mitigation Team Is Here for Clients 24/7

To successfully navigate the myriad issues presented by the coronavirus crisis, businesses like yours will need to draw on a wide range of resources, including legal counsel that can respond with immediate, practical advice and hands-on assistance. The M&R Coronavirus Risk Mitigation Team—made up of attorneys practicing out of the firm’s offices in New York, Illinois and Chicago—has been launched to do just that. Comprised of experienced, subject matter experts, the risk mitigation team is singularly focused on piloting clients through these troubling times.

The Risk Mitigation Team Addresses Cash Flow Questions

Among the many inquiries the risk mitigation team has received from clients is this: why are we hearing about so many companies drawing on their lines of credit in the wake of the coronavirus pandemic?

The assumption is that banks and lending institutions are somehow in peril. No, our financial system remains strong, and the rush for cash is not enough to stress a banking system that has been holding excess reserves for years.

In reality, certain businesses are pulling from existing credit facilities now as a precautionary measure and in light of provisions that may be included in their credit agreements; namely, representations and warranties that require a level of liquidity or cash flow in order to access cash. Given the uncertainty of how the outbreak will impact receivables going forward and to avoid a cash crunch, a number of companies are making the determination whether to leverage their lines of credit at this time when they have no doubt that they are compliant in terms of liquidity and cash flow.

The upshot is that all businesses, yours included, should understand the language and mandates of their credit agreements so they can factor that into their risk assessments and plan accordingly. Toward that end, the task force includes a team of banking and finance specialists that can provide all necessary advice and counsel.

Whatever Your Concern, M&R’s Coronavirus Risk Mitigation Team Is Here to Help

Our interdisciplinary response team stands to provide immediate guidance—24/7—to stakeholders on a wide range of topics, including workforce safety, leave policies and labor relations, as well as coronavirus-related operational, corporate, tax, insurance and real estate issues. Together, we will get through this crisis. Until we do, rest assured that M&R’s Coronavirus Risk Mitigation Team is on call for you.

We are working diligently to keep our clients up to date on coronavirus-related developments. Nevertheless, these developments are changing daily and, in some cases even hourly, so it is important that you make sure you are dealing with the most current information. That being said, this alert is not offered, and should not be relied on, as legal advice. You should consult an attorney for guidance and counsel regarding any specific concern or situation.