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Paul Zimmerman
pzimmerman@mrllp.com
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Navigating the Coronavirus Pandemic: A Critical Business Review Checklist

Given the continuing spread of the coronavirus (COVID-19) and resulting market and marketplace reaction, you are no doubt feeling the effects of a turbulent economy. More directly, you may well be dealing with your share of business upheaval.

If so, you should be aware of your rights and remedies in the event of coronavirus-related losses, as well as any other obligations you may have as a result of the pandemic. Toward that end, the following questions, answers, and checklist of items that should be top-of-mind will be helpful.

Q. Should I approach my various business partners (landlords, tenants, vendors, etc.) regarding potential defaults? Also, should I otherwise consider modification or forbearance agreements?

A. That depends upon your particular circumstances. At the very least, your various contracts should be reviewed to determine if they include cure periods and to identify modification rights and actual deadlines for payments. Also, since you may not be receiving the full services under your commercial lease agreement, you may be entitled to a reduction of rent. In addition, since there are stay-at-home orders in place, you should contemplate cancelling your current parking obligations. And one other thing to consider is looking at all non-essential contracts for termination and related notice requirements.

Q. What about my credit and bank agreements, should they be analyzed?

A. Yes, it would be a good idea to review these documents for cross-default provisions, personal guarantees, and relevant credit requirements should you need cash on hand.

Q. Could my commercial office lease allow for a rent reduction in the event of an unforeseen downturn in business?

A. Typically, rent is not subject to reduction by virtue of an event like the coronavirus outbreak. That being said, your particular commercial lease agreement could include force majeure, abatement or other provisions that could possibly be leveraged to your advantage. At the end of the day, it all depends upon the particular language of your lease.

Q. Should I review my corporate governance as it relates to the pandemic?

A. Yes, once the smoke clears and a loss of enterprise value is realized, there may be claims against your company’s directors and officers. That being said, you should consider revisiting your applicable indemnity and exculpatory language.

Q. Are there any governmental subsidies and loan programs available to me to combat coronavirus-related losses?

A. New subsidies and loan programs are coming online at a rapid pace. The Federal Reserve resurrected an asset-purchase facility from the 2008 financial crisis intended to encourage banks and financiers to make loans to small businesses and households. It also plans to announce a new Main Street Business Lending Program designed to support lending to “eligible small and medium-sized businesses,” though details have yet to be made available. In addition, earlier this month Congress authorized up to $7B for small business loans issued directly by the government.

More particularly and to overcome temporary revenue losses, the U.S. Small Business Administration is making low-interest federal disaster loans of up to $2M available to eligible borrowers in various designated states and territories.

Q. Might some of my coronavirus-related business losses be covered by insurance?

A. Perhaps. You should consider an audit of your insurance policies to understand the scope of your coverage for business interruption, event cancellation, worker’s compensation and the like?

Q. With my employees now working from home, do I need to revisit our employee handbook or any other employment policies?

A. Definitely. You should issue telecommuting policies—if you have not done so already—and must consider wage and hour issues unique to the circumstances we are now facing (e.g., how are your employees clocking in and out?). At the very least, you will want to bring your employee handbooks current given the various stay-at-home orders now in place?

Q. If I operate an “essential business,” do I need to provide documentation to employees so that they can come to work?

A. Though it may have no legal impact, a letter to law enforcement can be quite useful in the event an employee is stopped on the way to work. Such correspondence from counsel can identify your company by name and the business sector it falls within, (2) explain that the company qualifies as one providing an “essential service” pursuant to the relevant stay-at-home-order in force in your jurisdiction, (3) make clear that employees of your company, specifically, and within your sector, more broadly, are permitted to leave their residences to perform “essential functions” for the necessary period of time required to complete them, and (4) direct employees to present the letter to any law enforcement personnel that may request evidence that they qualify as an “essential service” provider.

Q. Should I be implementing an Employee Assistance Program?

A. While you certainly are not required to, implementing an Employee Assistance Program could go a long way to boost employee morale and address employee concerns during these dark days. The good news is that many insurance policies provide for such programs, which oftentimes include counseling to address grief, loss, family issues, parenting, relationship challenges and divorce, debt management, work conflicts, and legal questions.

10-Issue Check List

For your convenience, here is some of the foregoing information, along with additional considerations, in checklist form:

Insurance Policies: They may provide lost profits coverage, an Employee Assistance Program, and other valuable protections you may need now.
Corporate Governance Documents: Be mindful of your by-laws and operating agreements to determine the extent of indemnity and exculpatory language. Likewise, documentation should be reviewed to understand all notice provisions and what authority is permitted by whom in this environment.
Real Estate Leases: Review force majeure and abatement provisions, cure periods and other important terms. Also keep in mind voluntary expenses you may be able to eliminate in the near term, such as unused parking.
Employee Handbooks: These should be updated to reflect any stay-at-home orders issued in your location(s). Doing so can help to protect against potential claims, including worker compensation (if an employee is hurt while telecommuting). Handbooks should also contemplate employees clocking in and out remotely (time cards), establishing a “hotline” (even if a cellphone) in case someone has an emergency or complaint, and other such matters. Further, given that many employees are taking company property home, handbooks should specify that such property remains company property and must be returned in the same condition as it was when taken.
Bank, Credit and Joint Venture Agreements: Documentation addressing credit or other business arrangements should be reviewed for compliance, termination, and remedies sections, as well as cross-default language and personal guarantees.
Vendor Contracts: Many of these agreements include termination and/or cancellation fees. They should be reviewed before taking any action.
Essential Business Review: Are you an “essential business,” and if so, what steps are being taken to document that fact and provide evidence to your employees? Also, do you operate in a jurisdiction requiring a permit to be deemed “essential”? If so, and you believe you qualify, you should get one for a host of reasons.
Government Assistance: Many businesses qualify for government assistance. You should conduct a review to see if you are eligible for any such relief.
Return to Work Plan: Most businesses developed plans to leave their offices as a result of the coronavirus, but once stay-at-home orders are lifted, how will your employees return to your physical location(s) and get back up and running in an orderly fashion? Plans should be designed now specifying necessary steps to phase back into your office space(s).
Hotline: Does your company have a designated hotline in place (even if just a cellphone answered by a designated person) so that employees have the ability to make inquiries while working remotely? This could mitigate later claims suggesting you did not create an environment for employees to have their job-related concerns addressed in a timely manner.


Of course, the items presented here do not represent an exhaustive list of the issues you may be confronting or should be thinking about. Certainly, there will be other inquiries unique to your situation, which may require appropriate guidance.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.