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Direct Physical Loss and Business Interruption Coverage in the Wake of COVID-19

Just over a week ago, Michelman & Robinson reported on the countless entities nationwide that are being denied the benefits of business interruption coverage their insurance policies provide—this despite the losses they are suffering due to COVID-19-related shutdowns and disruptions to business. While our prior alert focused on the failure of carriers to conduct thorough and proper investigations before denying these claims, here we discuss a recent judicial decision that pertains to a frequent basis for the refusal of coverage: the concepts of “direct physical loss” to property, as well as the “virus” exclusion that many policies contain. (Read More)

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California Law Now Conforms to Federal Income Tax Treatment of PPP Loan Forgiveness

Last month, Governor Gavin Newsom signed Assembly Bill 1577 into law, which amends California’s tax code as it relates to loan forgiveness under the Paycheck Protection Program.

As Michelman & Robinson has reported time and again, PPP loans are subject to forgiveness when borrowers use proceeds to pay for payroll costs, interest on mortgage obligations, rent, and utilities. More good news for borrowers is that for purposes of federal income taxation, existing federal law excludes from gross income any amounts of PPP loans that are forgiven. (Read More)

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Hope for Companies Where COVID-19-Related Business Interruption Claims Have Been Denied Without Investigation

One of the several painful effects of the COVID-19 pandemic is that countless businesses have suffered and even been forced to shutter. This is the case despite the fact that many of them have insurance policies that not only protect from damage to property, but also typically cover lost profits from business interruption. Nevertheless, companies large and small are not reaping the benefits of their insurance policies because carriers are denying business interruption claims without proper investigation. (Read More)

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PPP Loan Borrowers At Risk for Potential Federal False Claims Act Liability

As if the COVID-19 pandemic and its impact on small businesses have not been enough of a stressor and burden, these entities could face potential liability under the False Claims Act to the extent they have obtained Paycheck Protection Program (PPP) loans. That is right, it is possible that such liability will attach by virtue of the good faith certifications PPP borrowers were required to make to receive federal funding. Michelman & Robinson explains. (Read More)

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For Some, PPP Loan Forgiveness Has Been Simplified

Seeking loan forgiveness just became a bit easier for those that have received loans of $50,000 or less pursuant to the Paycheck Protection Program. That is because the Small Business Administration, in consultation with the U.S. Department of Treasury, released a simplified loan forgiveness application for this category of borrowers.

The revamped application streamlines the procedure for forgiveness for PPP borrowers having loans south of $50,000, as well as their lenders. In fact, those lenders are able to process forgiveness applications much faster. (Read More)

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SBA Issues Procedural Notice Regarding PPP Loans and Changes of Ownership

Here is a question that we, at Michelman & Robinson, have fielded multiple times now: what impact does a company’s change of ownership—by way of a merger, acquisition, or otherwise—have upon existing loans issued pursuant to the Paycheck Protection Program? The Small Business Administration recently released a notice addressing this very query. Cutting to the chase: according to the SBA, it is the PPP borrower that remains responsible for its loan, regardless of any change in ownership. That being said, there are many nuances to this overall issue, which M&R breaks down here. (Read More)

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Michelman & Robinson Launches COVID-19 Practice Group

COVID-19 has shaken us all, and it has had an unprecedented impact on how businesses operate worldwide. While therapeutics and vaccinations will in all likelihood rid us of the pandemic sometime in the foreseeable future, even then, the collateral damage left in the wake of the outbreak will be far and wide. This is particularly true in terms of potential legal exposure on the part of companies hit hard by the novel coronavirus. (Read More)

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U.S. Senate Gets Additional Stimulus Conversation Started With Introduction of HEALS Act

Congress is working to agree upon a third round of stimulus to help individuals and companies still reeling from the economic and public health crisis triggered by the coronavirus pandemic. Toward that end, Republicans in the U.S. Senate have introduced the Health, Economic Assistance, Liability Protection and Schools (HEALS) Act, a nearly $1T package that includes provisions for (1) additional forgivable Paycheck Protection Program loans to help hard-hit small businesses remain viable, (2) reduced enhancement to unemployment benefits ($200 from $600) for those out of work, and (3) more $1,200 direct payments to most Americans. (Read More)

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Paycheck Protection Program Extended to August 8th

Those still wanting to apply for loans under the Paycheck Protection Program now have until August 8 to do so. The PPP, which was set to expire on June 30, has been extended by way of a bill passed by both the U.S. Senate and House of Representatives and signed into law by the President on July 4. (Read More)

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PPP Loan Deadline May Be Extended as SBA Issues New Rules Relating to Loan Forgiveness and Eligibility

Last night (June 30), with the deadline to apply for a loan pursuant to the Paycheck Protection Program set to expire—and with that nearly $130B in allocated funds being left untapped and on the table—the U.S. Senate passed an extension of the program to August 8. Whether the extension passes in the U.S. House of Representatives and is then signed into law is likely but remains to be seen; a House vote is pending as of this writing. In the meantime, attention continues to turn to the loan forgiveness process. (Read More)