Federal Reserve Offers Lending Program for Small and Medium-Size Businesses

UPDATED 11/9/2020

The Federal Reserve announced on April 9, 2020 that it has established a $600 billion lending program focused on aiding small and medium-size businesses who were in good financial standing prior to the onset of the COVID-19 crisis. This program will enable the purchase of qualifying loans from lenders lending to U.S. businesses with up to 10,000 employees or up to $2.5 billion in 2019 annual revenues. Additionally, it looks like firms who have taken advantage of the SBA Paycheck Protection Program will be eligible to participate in this program as well.

The Federal Reserve’s Main Street Lending Program will operate through two facilities: the Main Street New Loan Facility (MSNLF) and the Main Street Expanded Loan Facility (MSELF). Eligible lenders may originate new loans (under MSNLF) or increase the size of (“upsize”) existing loan/tranches (under MSELF) made to eligible businesses. The program is not operational at this time, but the comment period just closed on April 16, 2020. Accordingly, we can expect the program to start and have an application available soon.

The MSNLF will purchase participations in eligible loans originated by lenders on or after April 8, 2020. The MSELF will purchase upsized tranches or loans originated by lenders before April 8, 2020 that meet specific eligibility criteria. In either case, the purchases will be on a risk-shared basis with the lender retaining 5% of the loans and the relevant facility purchasing 95% participation in the loans originated by eligible lenders. This 95% purchased participation will be through a single special purpose vehicle on a recourse basis as set up by a Reserve Bank branch.

We will first discuss the borrower, lender, asset, and entity eligibility requirements that are the same across both facilities before delving into the facility-specific issues.

Common Requirements

Eligible lenders include U.S. insured depository institutions, U.S. bank holding companies, and U.S. savings and loan holding companies (“lenders”). While eligible borrowers are businesses with up to 10,000 employees or up to $2.5 billion in 2019 annual revenues. Borrowers must be a business created or organized in the United States or under the laws of the United States with significant operations in, and most of its employees based in, the United States. Borrowers who participate in program may not also participate the Primary Market Corporate Credit Facility as established by the Federal Reserve.

Eligible loans are unsecured term loans made by a lender(s) to a borrower that has: Continue reading »

COVID-19 and Possible Implications of Force Majeure Provisions in Contracts

Many companies, across industries, are wondering if they will be able to meet their contractual obligations due to COVID-19 and its far-reaching ramifications. In fact, many government restrictions, quarantines, supply chain and transportation disruptions are already impacting many companies’ performance.

The question is whether this pandemic and its effects on businesses will excuse any delays or non-performance on contracts. Specifically, how will courts interpret force majeure provisions and will COVID-19 count as a force majeure event? Ultimately, the answers depend on many factors, including the specific language of the provision in the relevant contract, the appropriate governing law, and fact or deal-specific concerns.

Businesses need to understand how force majeure provisions are triggered, how they are often interpreted, and how they may be affected by a health crisis, act of God, or government action and whether performance truly becomes impossible, impractical, or unreasonably expensive.

Force Majeure Basics and Court Interpretations

Contracts commonly attempt to address the risk of unforeseen events outside of your company’s control that will either delay or completely prevent performance through a force majeure provision. These provisions try to reduce uncertainty, allocate the risk of specified events, and excuse your company’s performance during the event. Typically, force majeure provisions include specific qualifying events that will preclude performance and several catch-all events such as acts of God, war, pandemics, labor strikes, natural disasters, governmental action or interference.

Most jurisdictions read force majeure provisions and events narrowly to avoid undermining the stability and predictability of agreements. If a catch-all is included, narrow interpretations are again applied to include only events of the same general nature as those explicitly listed. If the list of force majeure events is open-ended or includes a broad catch-all provision, the court will conduct a foreseeability test of the event in question to determine if it was a contemplated exclusion.[1] Continue reading »

Ruth Binger Talks About Response to COVID-19 Pandemic

Ruth Binger talks with John Launius, President of Vidzu Media, about leadership and the firm’s response to the COVID-19 crisis on Leadership Factor.

If you have any questions regarding your business, contact Ruth or any Danna McKitrick attorney.

https://vimeo.com/402291865

For additional COVID-19 related information, go to our Coronavirus/COVID-19 Resource Center.

Manufacturers Are Stepping Up to Produce Personal Protective Equipment

Manufacturers across the country have started repurposing or retooling their factories to produce much needed medical supplies and personal protective equipment (PPE). Companies with 3-D printers are being utilized to create face masks and shields and components for medical devices.

Here’s just a glance at what is going on in manufacturing. If you have any questions about manufacturing PPE, one of our attorneys can assist you.

Manufacturing Industry:

• Cycling manufacturers are making face masks and face shields and parts for ventilators and PPE, and even hydroalcoholic gel for hospitals.
• A firearms accessories manufacturer is now making protective gowns and masks. Automobile manufacturers are building respirators and ventilators. Fashion designers and clothing factories are producing face masks. A window manufacturers is producing face shields and exam boxes.

Medical Technology:

• The U.S. medical technology industry as a whole is working to meet the urgent demands by increasing production and are finding new suppliers. According to Scott Whitaker, president and CEO of AdvaMed, an international medical technology association, “We’re exploring ways to repurpose, retrofit, and reimagine the production of PPEs. Factories that typically make shoes and underwear and diapers are being retooled to make surgical gowns and gloves. Industrial paint masks and automotive respirators are being transformed into health care-specific safety masks.”
• The Global Center for Medical Innovation has designed two different face shield types (foam and rigid) that are ready for prototyping and production for manufacturers wishing to produce face shields for healthcare providers. GC
• The University of Wisconsin-Madison’s Department of Engineering has partnered with designers, a hospital, and team of medical providers, and a prototyping company to create an  open source design for a medical face shield.

State Level:

Continue reading »

Updated COVID-19 Information: St. Louis City, St. Louis County, Missouri, Outstate Missouri Areas, and Illinois

UPDATED 3/7/2022

Review the links below for guidelines for reopening your business based on your location. If you have any questions, one of our employment attorneys can assist you.

Additional Resources:

• COVID-19 Business Operations for Danna McKitrick
• Coronavirus/COVID-19 Resource Center
• CDC Guidance for Workplaces and Businesses
• CDC FAQs

COVID-19 ORDERS AND INFORMATION

State of Missouri

• Missouri Coronavirus/COVID-19 Information and Updates
• Missouri Vaccine Information

St. Louis Metro Area

St. Louis County

• NEW: Updated St. Louis County Mask Policy – February 2022
• St. Louis County COVID Information and Updates

City of St. Louis

• NEW: City of St. Louis Mask Policy Update – March 2022
• City of St. Louis COVID-19 Information and Updates
  

St. Charles County

• St. Charles County Coronavirus 2019 (COVID-19) Information and Updates
  

Franklin County

• Franklin County Covid Information and Updates

Jefferson County

• Jefferson County Coronavirus (COVID-19) Information and Updates

Lincoln County

• Lincoln County Coronavirus (COVID-19) Information and Updates
• Lincoln County Business Resources
  

Warren County

• Warren County Coronavirus (COVID-19) Information and Updates
• Warren County Dashboard

Other Missouri City and County Orders

Continue reading »

UPDATE: Salaries Speak Louder than Words

Equal Pay Day was celebrated this month on April 2, 2019. This date symbolizes how far into the year women must work to earn what men earned in the previous year. Thankfully, this date is not stationary. In fact, the date occurs seventeen days earlier than it did in 2005. While there is a lot to celebrate with that achievement, there is still a long way to go to completely close the gender wage gap.

In fact, the Supreme Court recently faced the opportunity to potentially close this wage gap even further when it granted cert to Rizo v. Yovino. See Katherine Flett’s blog post titled “Salaries Speak Louder than Words” for more discussion on the case. In Rizo, the Ninth Circuit sitting en banc found that the use of salary history to establish a starting salary violated the Equal Pay Act, as it perpetuated the discriminatory nature of women historically being underpaid in almost all sectors of employment. Thus, reliance on prior pay could no longer be considered as an affirmative defense under the Act’s fourth catchall exception, “any other factor other than sex.” Continue reading »

Mandatory Arbitration in the Transportation Industry Takes a Blow from The United States Supreme Court

New Prime, Inc. v. Oliveira

On January 15, 2019, the United States Supreme Court ruled unanimously in favor of Dominic Oliveira, a purported Independent Contracted driver (“owner-operator”) for New Prime, Inc., an interstate trucking company, holding that Oliveira’s dispute need not be compelled to arbitration.

The case hinged largely on the Federal Arbitration Act (FAA), a 1926 law that requires courts to move cases involving interstate commerce disputes to arbitration.  However, the FAA includes an exception in Section 1 for “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”

Oliveira filed a class action lawsuit, alleging that New Prime deprived its driver of legal wages.  New Prime sought to resolve the dispute via arbitration pursuant to Oliveira’s owner-operator agreement, which included a mandatory arbitration provision.

The first issue that the Court considered was whether a court or an arbitrator should decide whether the Section 1 exception applied.  In a unanimous opinion written by Justice Neil Gorsuch, the Court held that “a court should decide for itself whether Section 1’s ‘contracts of employment’ exclusion applies before ordering arbitration. After all, to invoke its statutory powers . . . to stay litigation and compel arbitration according to a contract’s terms, a court must first know whether the contract itself falls within or beyond the boundaries of §§1 and 2 [of the FAA].” Continue reading »

When Bad Guys Attack: Data Breach and Legal Exposure

Cyber criminals hack businesses for a myriad of reasons: to rob bank accounts by hacking email accounts and intercepting wire transfers; to file fraudulent tax returns using stolen customer or employee personal data; to commit health insurance or Medicare fraud; to steal intellectual property; to destroy  property; and to deny service.  Websites are also hacked as a mechanism to cyber hack other businesses. (See data protection tips here.)

Cyber hackers include your employees, identity thieves, contractors and vendors, business competitors, terrorists, state-sponsored actors and others. The success of your business and its very existence could be placed in jeopardy because of unauthorized business account access, loss of ability to execute transactions, regulatory, reputational and litigation costs, and significant remedial costs.

Focusing on the litigation ramifications, let’s use the following fictional ABC Co. case study to understand the various laws involved. Continue reading »

Recent Illinois and Missouri Supreme Court Decisions Reduce Litigation Risks of Companies Operating in Multiple States

On September 21, 2017, the Illinois Supreme Court handed down its decision in Aspen American Insurance Company v. Interstate Warehousing, Inc, greatly limiting the ability of plaintiffs to sue foreign corporations in Illinois simply because the corporation is registered to do business in and may have minimal contacts with Illinois. As described below, the decision joins Illinois with a nationwide trend disfavoring forum-shopping – a practice in which plaintiffs bring suit against defendants in plaintiff-friendly venues unrelated to the defendant’s contacts and the injury giving rise to the action.

The Aspen case concerned a claim filed in Illinois by a plaintiff who had been injured in a fire which occurred in Indiana. The defendant corporation was incorporated in and maintained its principal place of business in Indiana, although it did maintain a warehouse in Illinois and was also registered to do business in Illinois. The defendant corporation moved to dismiss the lawsuit for lack of proper jurisdiction as a result of these facts and the Circuit Court agreed. On appeal, the plaintiff argued that maintenance of a warehouse in Illinois and being registered as a foreign corporation in Illinois was sufficient to impart general jurisdiction over the corporation. Continue reading »

Best Practices for Avoiding Misleading Browsewrap and Clickwrap Agreements in Cyberspace

Visiting a website and merely viewing its contents can bind you to an internet “Terms and Conditions” or “Terms of Use” (“browsewrap” or “clickwrap”) contract.

Website owners, as technology providers, have a dilemma as they wish to facilitate business in the most efficient way. Maintaining the integrity of their software by controlling the scope of the limited software license they are offering is essential to protecting their copyrighted technology.

Given website owners are offering their services to the world, a pressing concern is a disgruntled website user who sues via a class action in the user’s home state. The issue for the courts is how many dispute resolution pre-existing legal rights a website owner can remove through its browsewrap contract, often called “Terms and Conditions,” if the website user receives little to no notice of its existence or has no knowledge that such a notice refers to a binding contract.

If you look carefully at a website you frequently use, you are likely to see various notices in capital letters in highlighted colors referencing that your use of the website is an automatic agreement to the website policies of privacy and terms and conditions. You may not know that this means you are binding yourself to a contract. If you do click on that bothersome notice link, you will most likely notice a nonnegotiable contract that contains a choice of law, agreement to arbitrate, and/or class action waiver. Given the limited attention span of a website user, most users will not click on the link. This is especially true if the website owner has buried the notice at the very end of the page, made it as inconspicuous as possible, and does not require any action to proceed with using the website. Continue reading »