The global pandemic triggered by the coronavirus (COVID-19) is affecting all aspects of our clients’ business operations, and we are addressing a number of legal and practical challenges posed by business enterprises in a variety of substantive areas. Importantly, as we proactively monitor developments and best practices on behalf of our clients, the following are some of the important issues that Boards of Directors are confronting:

  • How should the Board exercise its fiduciary duties, including its duty of oversight, in the current environment?

  • What topics should the Board discuss with management?

    • Company’s operational response to COVID-19, including with respect to employees, and customers

    • Effect of the current economic climate on corporate strategy

    • Internal and external communications including with employees, governmental entities, investors, and shareholders

    • Effect of the current environment on the company’s operating plan and ability to achieve milestones previously delivered to investors

    • Access to capital, including the ability to draw on existing credit facilities

  • How do we balance the Board’s duties with management’s need to run the day-to-day business of the company?

    Consider these fundamental questions as your business enterprise faces COVID-19 challenges:

    1) How much cash or other sources of liquidity do you have? What’s your runway, sitting here today, so we know how much time there may be in order to determine what needs to be done, either operationally or in business planning.

    2) What levers can you pull to extend that runway?  What can be done immediately, and what are medium and longer term steps that if you start now will help later on – to the extent that you can get there.

    3) What are the constraints and limitations in your debt documents and contracts? How much room do we have to maneuver within the loan documents as they exist today without running afoul of covenants set forth therein?

    4) Who are your stakeholders, both in your capital structure and operationally? With respect to each constituency, what are their particular motivations, rights and obligations to begin to understand what the “table” looks like.  We must not lose sight of the negotiating table and which players will be sitting on the other side, what they want and what leverage they can impose.

Barson Advisory LLC is equipped to provide strategic advice to clients on how to best approach these key issues, and we have already been working with certain of our clients to develop and execute a comprehensive approach to this complex and fast‐moving situation. Each business will face its own unique challenges as the focus is placed on both the safety of employees and the continuity of operations. We do not take the importance of advising our clients through these extreme difficulties lightly, and we recognize that our experience managing through change and mitigating financial risk is critical at times like this.