AdobeStock_359775405-300x200Tenants across America have faced unprecedented challenges during the COVID-19 pandemic. Most of the eviction moratoriums have focused on residential leases, in order to keep Californians home and healthy during these dangerous times. Small business owners have also been granted some eviction protections. Regardless of your business size, you might be surprised to learn just how much leverage you have in your commercial lease. Below are three critical strategies that can help your business try to remain financially healthy during and in the wake of the coronavirus.

Renew Your Current Lease

Businesses that are on relatively strong financial footing, and whose leases are expiring in the next six to eighteen months, may find themselves with greater leverage to negotiate renewal terms. Landlords are hesitant to lease to new tenants (who they may not be able to evict). With the U.S. economy is in downturn and the economic future uncertain, landlords are also worried about their future rental prospects. In such conditions, commercial tenants who have remained in good financial health and standing with their current landlord will be well-positioned to negotiate lease renewals with favorable terms.

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The coronavirus pandemic has drastically affected the American workplace. Throughout the country, employees are working from home, and companies are radically changing the way they get business done. Many of these creative solutions are changing California businesses for the better. Existing employment laws still apply to the new workplace. As an employer, you need to be aware of certain issues that could expose you to liability.

Scheduling Changes

Many companies have been forced to lay off workers or reduce hours to stay in business. Before you make any decisions about firing or layoffs, you should be aware of the potential legal consequences of doing so. Employees who have a written employment contract or are part of a union may have protections against these actions, even in the unprecedented circumstances of a global pandemic. Even changing shifts or job responsibilities could trigger the provisions of such a contract. Consult with an employment lawyer before implementing changes that could expose your business to liability.

AdobeStock_336124038-300x200The coronavirus pandemic has caused drastic changes in almost every facet of life in California. For instance, federal, state, and local courts are all facing a major backlog. Many courts were shut down entirely for months, open to only the most urgent cases (such as restraining orders). Now courts have reopened, but many are operating at reduced capacity, meaning they have been making slow progress through the serious backlog of cases. Litigants should be aware of how this backlog will affect their legal claims.

The Incentive to Settle

Parties have the option of settling their claims out of court before trial. Whether they choose to do so depends on a wide range of factors, including:

AdobeStock_359915477-300x200Existing employee safety laws can be applied to workers who are exposed to the coronavirus. While it is not yet clear exactly how insurance companies and courts will treat these claims, what is clear is that employers must take precautions to mitigate their liability for COVID-19 exposure in the workplace.

How to Minimize Your Liability for Exposure

In almost every type of civil case, the defendant’s conduct is measured against a standard of reasonable behavior. There are a few instances of strict liability, in which the defendant is liable no matter how reasonable their behavior, but these are limited to inherently dangerous scenarios that are clearly defined under existing torts law.

AdobeStock_83043455-300x200It is never easy to break into the competitive world of technology. Now, in the midst of a once-in-a-lifetime global pandemic, new businesses face more challenges than ever. The good news is that there are still funding programs available to small business owners and startup companies in California.

What is CalCAP?

The California Capital Access Program (CalCAP) is a program designed to offer financial assistance to small business owners in California. CalCAP assists banks and other financial institutions in making loans and funding more available to small businesses. CalCAP is a reserve that acts to underwrite losses that financial institutions sustain on small business loans. This allows them to make more loans available to small business owners.  Loans are available for startup capital, expansion funds, and even for working capital to keep your business afloat during production shutdowns and loss of business due to COVID-19.

Flatten-Curve-COVID-300x115Is your business in compliance? The guidelines for operating your business while preventing the spread of COVID-19 are constantly changing. As your trusted business advisors, we would like to keep you updated with the most relevant information. It is imperative that you update your business’s Social Distancing Protocol to stay in compliance or your business could be fined by the County or forced to close.

Per the July 13th Statewide Public Health Officer Order, all bars, pubs, breweries and brewhouses whether indoors or outdoors must close. Indoor operations for the following businesses have also been restricted:

  • Dine-in restaurants must close indoor seating, but may continue operating outdoor dining, takeout and delivery.

AdobeStock_263358883-300x200Mergers and acquisitions are an important tool for expanding your business in the competitive field of technology. Unfortunately, hidden debts and liabilities can impose serious financial burdens on an unassuming buyer. Some buyers try to avoid this situation by purchasing assets rather than an entire company. This approach can still leave a buyer assuming debts that are secured by the assets being purchased.  When structuring a transaction as an asset purchase instead of a stock purchase, it is important to understand what debts or other liabilities exist that can become obligations of the asset buyer.

The Benefits of Structuring a Deal as an Asset Purchase Agreement

When one company acquires or merges with another company, the buyer is not only receiving the assets of the target company but also its debts and liabilities if they are not discharged prior to the sale.  The assumed debts and liabilities can even include ones that are unknown to the buyer.  If a buyer does not conduct proper due diligence prior to an acquisition, a buyer may assume liabilities that it is not aware of and courts can deem the buyer to have had “constructive knowledge” of those debts and liabilities.   Constructive knowledge is when one is presumed by law to have knowledge of a fact, regardless of whether or not one has actual knowledge of the fact, since that knowledge can be obtained by the exercise of reasonable care.

AdobeStock_279822215-300x200You might be surprised to learn that an ownership interest in an LLC can be governed by securities law. There are certain circumstances in which an ownership interest is a security subject to federal and state securities laws. Even if an exception applies, you still might be required to file an exemption notice with the government. Be sure to consult with a Silicon Valley business lawyer about which securities regulations apply before buying or selling any ownership interest in an LLC.

What is a Security?

A security is a negotiable financial interest with monetary value. Equity securities represent an ownership interest in a business entity (whether it is a corporation, partnership, trust, or LLC). Debt securities are financial instruments that represent money owed, along with repayment terms such as interest and due dates. A debt security can be either secured by collateral or unsecured. If it is secured, it may be subject to various securities regulations.

Fotolia_172702870_Subscription_Monthly_M-1-300x187COVID-19 has changed business completely, across the world, and throughout every industry. As the country slowly reopens, business is resuming again. Mergers and acquisitions will slowly begin again as business owners feel more comfortable moving forward. It is important, however, to understand the additional risks a business can face while completing a merger or acquisition during the coronavirus pandemic.

The Increased Focus on Due Diligence

Business owners always have a legal obligation to perform adequate due diligence investigations prior to completing a merger or acquisition. With the added risks of coronavirus, these investigations must be even more thorough and extensive. Purchasers must investigate and supply chain issues and potential production delays. The target company might have contractual liabilities for unfulfilled performance obligations or liability for coronavirus cases that occurred on its premises. All of these additional issues must be investigated along with the normal investigations conducted during due diligence. Business owners who fail to complete adequate due diligence investigations can be liable to shareholders for the losses a company sustains as a result.

AdobeStock_327744070-300x200Force majeure is an important protection for businesses entering into any contract. Especially during the dramatic and unpredictable consequences of the coronavirus pandemic, business owners are wise to use and enforce force majeure clauses whenever possible. An experienced business lawyer can help you draft and use this protection properly. An attorney can also help you deal with a vendor or client who is attempting to improperly use a force majeure clause to get out of fulfilling contractual obligations.

What is a Force Majeure Clause?

Force majeure is a French term that translates to “superior force.” In contracts, it is used to address what will happen in the event of unforeseen circumstances that are not caused by either party. A force majeure clause can address specific events (like wars, strikes, and riots) or general categories (such as “acts of god”). When such a clause is written and enforced properly, it can excuse both parties’ obligations under the contract.

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