It has been quite the week and I wanted to provide a meaningful update covering many of the recent conversations I have had with clients and colleagues.
Economic Relief
As of the date and time of this email, no meaningful economic relief has been provided to the restaurant and hospitality industry. As you may be aware, over the weekend, there was significant traction on Senator Rubio’s Keeping Workers Paid and Employed Act. However, on Sunday, the bill died but I remain optimistic that we will see a bill from the U.S. House of Representatives as early as today and such bill may emulate the relief offered in Senator Rubio’s bill which provided up to 100% forgivable loans to small businesses with 500 or fewer employees per location (or business entity) provided that the cash from the loan covered employee payroll, benefits, and certain business expenses such as rent and utilities. I will keep you updated as progress is made on economic relief efforts. In the interim, it is imperative that you get involved – contact your Representatives and request that they immediately support such legislation in the U.S. House.
Rent ReliefI have had countless conversations regarding a tenant’s obligation to pay rent during the shutdown and shelter-in-place. Rather than getting into a contentious dispute with your landlord as to whether or not a force majeure clause in a particular lease excuses the tenant’s obligation to pay rent (note: force majeure clauses typically apply to an event which “prevents performance,” whereas a shutdown does not necessarily prevent the payment of rent), I would offer a more practical approach - if you have not already done so, reach out to your landlord and start a dialogue about the status of your business and cash-flow. Over the last week, I have reviewed numerous rent relief letters and many requests have been met by the landlord with a favorable outcome ranging from rent deferral to outright rent forgiveness.
Business Interruption Insurance
The buzz last week was that business interruption insurance will deny your claim for coverage of losses related to COVID-19. While it is true that most business interruption insurance policies specifically exclude coverage for losses related to viral contamination or pandemics, you should not assume that your claim for coverage will be denied. First, not all policies exclude viral pandemics. Further, these are unprecedented times and we are in uncharted waters – there are virtually no prior business interruption insurance cases which involve total or partial closing of restaurants due to a pandemic. The question as to whether or not coverage applies will likely be decided later by legislatures and courts in each state with varying decisions. Additionally, most policies require that the insured give prompt notice to the insurer and, to the extent such ‘prompt’ notice is not given, coverage may be subsequently denied if notice is given too late. There is virtually no downside in making a claim for business interruption insurance with the potential upside that (i) your claim gets approved or (ii) you have preserved your rights to potentially litigate coverage later. Please review a white paper that our Insurance Coverage and Recovery attorneys prepared on pursuing insurance coverage to cover financial losses from the COVID-19 crisis – click here.
Illinois Liquor Licensing
If you maintain an Illinois liquor license, I would highly recommend monitoring the ILCC’s website for COVID-19 related updates.
Over the last week, the ILCC has temporarily authorized all retail licensees to conduct to-go sales and deliveries. You can view the guidance here.
Additionally, I have fielded many inquiries over the last week regarding liquor returns and the ILCC’s Delinquency List. Currently, only beer (sold on, or before, today) is returnable in accordance with the provisions of ILCC's guidance, though distributors are not required to accept such returns. Additionally, at this time, the delinquency list will be maintained such that retail licensees who have not paid a distributor, in full, within 30 days after delivery will be placed on the Delinquency List unless such retail licensee timely files a bona fide dispute with the ILCC regarding the alleged outstanding balance. As usual, wine and spirits distributors are not permitted to sell wine and spirits to any retailer while such retailer remains on the Delinquency List. You can view the latest guidance from ILCC here.
If you have not yet reviewed the Compliance Directive from the Illinois Liquor Control Commission, I would highly recommend doing so. You can view it here.
I would also strongly advise reviewing the FAQ compiled by ILCC here.
Taft's COVID-19 Toolkit
Now, more than ever, it is imperative to stay informed as laws and resources are evolving at hyper speed. My colleagues and I at Taft have compiled a COVID-19 Resource Toolkit that we update daily with issues realted to real estate, employment, business & finance, tax, and virtually every other practice area. You can access the tool kit here.
Taft also sends a COVID-19 Daily Dashboard with the latest updates and I would encourage you to sign-up here.