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NAVIGATING TROUBLED WATERS: THE CHALLENGES FACED BY LENDERS AND BORROWERS DURING THE COVID-19 CRISIS

The COVID-19 pandemic has and will continue to disrupt “business as usual” for most businesses in the United States and around the world. Even the most well-capitalized companies are likely to see constrained liquidity, and for those which lack significant cash reserves, lease and loan defaults are of primary concern. Additionally, these obligations often include personal guarantees for the businesses’ principals and compound an already difficult situation. In the current environment, all industries are feeling the heat, particularly in the retail, restaurant, travel, hospitality, entertainment and manufacturing sectors. Simply put, with large numbers of consumers, customers and employees “sheltering in place,” cash flow shortages are everywhere and have both lenders and borrowers wondering what to do to protect themselves and scrambling to review financial covenants and other loan document provisions regarding rights and remedies. Read more…