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In the wake of the COVID-19 pandemic, the Supreme Court of Texas along with many Texas counties have issued moratoriums on evictions and foreclosures, the applicability of which remains varied and depends on local orders. In “Texas Restricts Evictions Due to COVID-19: Landlord Considerations,” colleagues Hannah Hollingsworth and Adam J. Weaver address that even though evictions are currently on hold, landlords should carefully review their leases and continue to fulfill their obligations thereunder in order to protect their rights once the courts have reopened.

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The Federal government issued an advisory list of essential critical workers, including workers doing certain types of construction, but deferred to states and local governments to implement any orders. In “Construction During COVID-19: Is It Essential?,” colleagues Laura Bourgeois LoBueMatthew D. Stockwell, and Elizabeth J. Dye address that there is no “one-size-fits-all” approach to how governments are handling construction.

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In the wake of the COVID-19 pandemic, governments across the U.S. have issued moratoriums on evictions and foreclosures for residential and commercial properties and other restrictions on available remedies. In “National Landscape of COVID-19 Eviction and Foreclosure Moratoriums Continues to Shift,” colleagues Carmela D. Nicholas and Jeff Clare discuss how the limitations vary on whom they protect and what remedies are restricted, but they do not constitute forgiveness of the underlying obligations.

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The insurance industry responded to the emergency of the COVID-19 pandemic with preemptive press statements that property insurance policies would provide no coverage—even before policyholders submitted any claims. In “Many Commercial Property Insurance Policies Provide Coverage for COVID-19 Exposures,” colleagues Robert L. WallanDavid F. Klein and Tamara D. Bruno discuss that the insurance industry’s generic arguments that there is no coverage for the COVID-19 pandemic should not be accepted at face value, as coverage may be available depending on specific policy terms and individualized facts.

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The Department of Homeland Security has outlined 16 critical infrastructure sectors which represent the types of businesses that can remain operational during the COVID-19 pandemic. However, each state—in some cases, local governments—can designate what qualifies as “essential.” Businesses should be mindful of the government regulations and potential penalties for noncompliance. We recommend working with legal counsel to understand your state’s definition of an “Essential Business” and the permissible exemptions from stay-at-home orders that may exist.

Outlined below (and available here as a PDF) are practical tips to follow to ensure you are complying with all applicable orders.

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In many cases, borrowers and lenders are working together to weather this crisis. A forbearance agreement is often the first step—after a pre-negotiation agreement is entered into. In “Distressed Real Estate During the Coronavirus Pandemic: Tips for Negotiating Forbearance Agreements,” colleague Caroline A. Harcourt  discusses how the coronavirus pandemic, stay-at-home orders and social distancing have put unprecedented strains on borrowers—hotels are closed or barely operational, retail properties are shuttered, tenants are not paying rents (and, in many jurisdictions, shielded from eviction)—yet owners must continue to meet their debt service payment (and other) obligations and fund their required reserves.

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Real Assets are supposed to generate cash, yet in many sectors this is no longer the case. Please join us on Monday April 13, 2020, at 12:30pm ET / 9:30 am PT for the first in a webinar series addressing some of the most pressing challenges currently affecting investors, lenders and owners in three key categories of Real Assets. Monday’s webinar topic will be Real Estate: Financing During the COVID-19 Pandemic.  This 60-minute conversations will cover:

  • Current state of affairs
  • Issues for Lenders and Borrowers in preparing for and negotiating workouts, including the pre-negotiation agreements and restructuring/forbearance agreements (from each perspective)
  • Non-Recourse Carve-Out considerations
  • Considerations in CMBS/real estate capital markets context (i.e. margin calls; role of special servicer)
  • Issues/opportunities within the debt stack – the role of intercreditor agreements
  • Creditor Rights issues – insolvency and bankruptcy considerations in forbearance/loan modifications

Speakers:


Caroline Harcourt
Partner, Real Estate

Eric Kremer
Partner, Real Estate

Patrick Potter
Partner, Insolvency & Restructuring

Andrew Weiner
Partner, Real Estate

Opening Remarks:
Mark Lessard
Partner & Leader of Global Finance

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New Small Business Administration (SBA) guidance implementing the Paycheck Protection Program (PPP) confirms that a somewhat narrower set of affiliation principles now applies to SBA loan programs, including the PPP. In “COVID-19 Relief: SBA Issues Regulations & Guidance on the Payroll Protection Program,” colleagues David B. DixonJohn E. Jensen and Steven A. Kaplan discuss how the SBA issued interim regulations and guidance on the Paycheck Protection Program, including confirmation of “affiliation” rules that may leave many companies affiliated with their investors and other businesses.

 

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The coronavirus pandemic is resulting in a wave of forbearances and workouts. A frequent first step is the pre-negotiation agreement. In “Distressed Real Estate During the Pandemic: The Importance of Pre-Negotiation Agreements for Borrowers and Lenders,” colleague Caroline A. Harcourt addresses that a good PNA should be quickly negotiated but carefully considered, getting both parties to substantive negotiations quickly. A PNA should not alter the status quo. Instead, it should ensure that the parties can share information and freely discuss terms.

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On April 8, New Jersey Governor Phil Murphy signed Executive Order 122 which, among other things, halted nonessential construction in New Jersey effective Friday, April 10 at 8:00 pm. Essential construction may continue, which includes health care and pharmaceutical manufacturing facilities, transportation and infrastructure projects, pre-k to 12th grade and higher education facilities, utility projects and affordable housing. There are also several other exceptions for facilities that manufacture and distribute goods and products sold online, projects supporting first responders, government projects, emergency work and work required for safety reasons, and smaller residential projects. 

Governor Murphy’s Order also sets forth requirements for safety on essential construction projects that must be followed, including limiting meetings, distancing rules, following CDC guidelines, staggered lunch times and breaks, and required face coverings. For a complete list of what is considered essential and what non-essential work is excepted, as well as the rules for essential projects, Executive Order 122 can be seen here. For more information on what you can do if your project is affected, see So the Government Shut Down Your Construction Project—What Next?