COVID-19 - Preparing for Counterparty Distress or Insolvency

COVID-19 - Preparing for Counterparty Distress or Insolvency

March 20, 2020, Covington Alert

The full ramifications of the COVID-19 pandemic are uncertain, but we should expect that significant economic dislocation will be felt not only by industries already suffering from financial distress and seeking bankruptcy relief (retail, healthcare, small biotech, pharma companies, and energy) but many other industries, including manufacturers, carriers, shippers, and companies in the hospitality and entertainment industries. This alert highlights certain measures that companies should consider taking in connection with the economic impact of COVID-19 and the likely uptick in bankruptcy filings by counterparties laboring under a liquidity crisis caused by the economic slowdown.