In managing the volatility and uncertainty caused by the global COVID-19 pandemic, many industries are grappling with complex legal and commercial challenges, from manufacturing shutdowns, interrupted supply chains and quarantines, to dislocated labour markets and restrictions on trade and movement, including the practical shutdown, or near shutdown, of substantial portions of the world economy. Moreover, governments have intervened to provide liquidity and emergency relief to credit markets and vulnerable industries and to preserve payrolls.
Nonetheless, economic uncertainty has forced many companies, lenders and investors to seek guidance on their rights with respect to contractual obligations. This alert provides analysis on some of the key areas of concern regarding contractual performance that have been raised by a range of our clients to date, namely:
- force majeure provisions
- material adverse effects provisions
- ordinary course of business covenants
- the frustration of purpose doctrine
- covenants and events of default triggered in finance documents
- EBITDA maintenance covenants
For an earlier version of this Client Alert that focuses on US law, click here.
For additional insights into the business and legal implications of the COVID-19 pandemic, please visit our Knowledge Center.
