Our practitioners across the firm have been advising our clients on a wide range of matters particularly relevant to their operations in this current landscape, including:
Workforce and employment
The coronavirus is having profound effects on our health and the economy. Many businesses have suffered slow-downs or forced closures, with significant impacts on employees. We can advise on the options available to businesses in managing their workforce through this unprecedented crisis including: stand-downs, redundancies, employee entitlements, Government relief (including the recently legislated JobKeeper wage subsidy), pandemic leave options, unfair dismissals and WHS obligations. We’re here to help you protect your business and workforce.
Force majeure and COVID-19 clauses
We have advised a large number of private and public sector clients over the past couple of weeks regarding the operation of force majeure clauses in their key supply contracts – and in particular:
- the ability of suppliers to rely on force majeure clauses to get relief from their obligations and flow-on liabilities; and
- the ability of our clients to rely on force majeure clauses to obtain relief from their obligations, including to pay or rescope services.
We have also advised our clients more generally on proactively assessing their force majeure exposure in their existing “key” contracts on what to look for in contracts, what the consequence is of a force majeure event occurring, and the consequences of failing to adhere to notice periods.
We are seeing many deals with new “COVID-19” clauses, which can have a material impact on the way contracts are applied as the COVID-19 circumstances continue to develop.
New amendments under the Coronavirus Economic Response Package Omnibus Act 2020 (Cth) provide a moratorium on directors’ personal liability for insolvent trading for six months. We are assisting our clients by guiding directors through the various laws surrounding insolvent trading, including the availability of the original safe harbour defence, and the interplay with directors’ duties generally. During this period of uncertainty, it is important that directors receive timely and proper advice so that they can manage their businesses adequately and appropriately.
As workforces move out of secure and controlled facilities, we are working with clients and their security teams, particularly APRA regulated clients, in ensuring remote working practices of key vendors are implemented in a safe and compliant manner. This includes consideration of CPS 231 and 234 requirements.
This is a constantly changing area of practice, with the Electronic Transactions Act having very recently been amended to allow the Minister to make regulations altering how documents may be executed. We are on top of developments in this space and we are advising clients on how to do business effectively and in compliance with regulatory and internal corporate requirements whilst working remotely and being unable to meet face to face.
Proactive management of supply chains
We have advised clients on the proactive management of their supply chains, including both practical and contractual steps to minimise clients exposure whilst continuing to receive critical services during the COVID-19 outbreak. This includes consideration of ‘non-legal’ steps, such as business continuity planning and risk management activities.
Obligations to pay
A key consideration for our clients in the current environments is “do we still have to pay fees under our contracts”, either where they are no longer receiving the quality of work that they contracted for or where the work is no longer required. This is often a complex and sensitive area, and we have been working with organisations to help them understand their rights and ongoing obligations.
Frustration, abandonment, and repudiation
The pandemic has impacted the ability of some contracting parties to fulfill their contractual obligations. This has already resulted in suppliers being unable or unwilling to perform their obligations materially. We are working with clients to navigate the notoriously complex law around frustration, repudiation and abandonment, and what relief they may have.
Data and privacy issues
Companies remain subject to the same legal and regulatory framework as was in place before the start of the COVID-19 outbreak. This is particularly relevant to data and privacy issues, with organisations increasingly asking questions of and collecting data from employees and visitors relating to their health condition. The OAIC has recently released an official statement and privacy guidelines to assist organisations to keep workplaces safe and handle personal information appropriately as part of their COVID-19 response.
The Federal, State, and Territory governments have release unprecedented stimulus measures designed to alleviate the adverse financial impact of COVID-19. Our Tax team are assisting our clients to navigate the existing and new relief measures announced by the governments and the Australian Taxation Office.
The Government has recently introduced measures to provide relief for tenants and landlords that have come under financial distress due to the impact of coronavirus. We are advising clients on lease provisions and potential for deferment, abatement or other relief in relation to rent, outgoings and other charges payable under lease arrangements, as well as advising on commercial negotiations with the landlord or tenant as applicable.
The coronavirus pandemic has seen a rise in COVID-19 related cyber security attacks, with businesses now at greater risk as their workforce moves to remote working. To protect and prevent malicious attacks and damage, we have been working with clients to analyse the cyber health of their organisations (including ensuring clients’ cyber incident response plans reflect remote working arrangements) and assisting with coordinating remote responses to cyber incidents.
The unprecedented impact of coronavirus on the economy has resulted in a great amount of uncertainty regarding the future of many businesses and the roles and responsibilities of their directors in steering those companies appropriately. We can advise on class action risk including continuous disclosure obligations, safe harbour legislation and effectively communicating with shareholders. We can also advise on product liability, industrial action and mass tort claims.
Medical devices and patents
The TGA has published new guidance to assist manufacturers of medical devices and their parts with meeting their regulatory obligations. In addition to our deep TGA regulatory experience, G+T’s IP team can assist with any patent assertion issues that arise for manufacturers and suppliers of medical devices when responding to COVID-19 imperatives.
G+T is advising clients on certain clauses can be triggered in the current climate. These include:
- Change in Law clause in project documents: Contracts often contain this clause which entitles the project company to seek relief from its obligations if compliance with a Change in Law will cause delay to the date for commercial operation and/or additional costs to the project company. Whether the COVID-19 pandemic could be considered as a ‘Change in Law’ will turn on the precise wording of the contract.
- MAC/MAE clauses in financing documents: Material Adverse Change (MAC) and Material Advers Effect (MAE) provisions are routinely included in financing agreements. For Borrowers, the deterioration of their financial condition as a result of the COVID-19 pandemic could constitute a MAC or MAE under their financing agreements, triggering event of default (EoD) provisions. Conversely, financiers exposed to industries particularly affected by the pandemic (eg. travel) may consider invoking MAE/MAC provisions to demand early repayment from borrowers due to the occurrence of an EOD or to draw-stop further lending where there are revolving facilities or staged drawdowns. We are advising borrowers and financiers who will need to take legal advice on relevant clauses and who will need to consider the ability to repeat representations and warranties in finance documents in the case of continuing drawdowns (including the need to make appropriate disclosure).
- Market Disruption clauses: Issues can also arise for borrowers in the context of market disruption clauses in mandate letters (particularly in the underwriting of capital markets issuances) and loan agreements (usually regarding inability to determine interest rates or benchmark rates not reflecting the actual cost of the lender’s funding). We are advising issuers on whether they face exercise of rights by underwriters/arrangers to withdraw from transactions on the basis of market disruption or unilateral attempts by lenders to increase interest rates where there is no mechanism to do so in the loan agreement.
Market flex gives the Arrangers or Underwriters of bank debt facilities some flexibility as to the terms of the financing after signing of the relevant facility agreement. Historically, it has been included so as to help Arrangers/Underwriters achieve successful syndication in times of market duress. We are advising our clients on the negotiation and operation of “market flex” clauses in mandate letters.
The impact of COVID-19 on Australia’s economy means that many companies will need to assess all available means of accessing funding to alleviate the brunt of a cash flow squeeze. Companies, directors, underwriters, investors and regulators will need to improvise and adapt in order to overcome the financial uncertainty ahead. In the age of COVID-19, we are advising listed clients on their best options for raising capital and how to be best placed to move swiftly and decisively when required.
Key regulators have had to respond quickly to addressing issues and risks from the outbreak of the coronavirus. We are advising clients on the approach ASIC, the ACCC, APRA, AUSTRAC and other regulators are taking in the new environment, including ASIC prioritising matters where there is the risk of significant consumer harm, serious breaches of the law, risk to market integrity and time critical matters and the suspension of a number of non-time critical matters.
Temporary changes to Australia’s foreign investment regime have been announced, with monetary thresholds for foreign investment proposals covered by the Foreign Acquisitions and Takeovers Act and its associated regulations being reduced to zero as a result of the COVID-19 crisis. This means that it is more critical than ever for investors to seek expert advice to assist in gaining FIRB approval for foreign investments and we are advising clients, both buyers and sellers, on their best course of action in the current environment.
Continuous disclosure obligations
The ASIC continues to ensure that listed companies are disclosing to investors any material impact on their profits (though the ASX has confirmed that a listed entity’s continuous disclosure obligations do not extend to “predicting the unpredictable”). This means that every listed entity needs to put themselves into a position to disclose to ASX any implications arising from the spread of COVID-19 and government and private actions taken in response, which a reasonable person would expect to have a material effect on the price or value of their securities (subject to the carve outs). We are assisting our clients assess updates to continuous disclosure and whether their continuous disclosure obligations are triggered and what is needed to discharge them.