Shearman & Sterling partners Mark Chorazak, Reena Agrawal Sahni, partner Patrick Clancy, and Bradley Ziff hosted a webinar discussion on current developments in the LIBOR Transition.

In connection with the continued efforts of New York State to grapple with the COVID-19 pandemic, a recent order updated the emergency measures in place impacting pending and potential litigation in New York and possibly beyond.

The Federal Reserve Board (the Federal Reserve), the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (collectively, the Agencies) issued a final rule^[1] amending the “covered fund” provisions of the Volcker Rule (the Covered Fund Amendments). The Covered Fund Amendments are substantially similar to the changes that were proposed earlier this year^[2] and will be effective on October 1, 2020.

Partner Omar Samji and counsel Angela M. Heywood Bible published an article in Currents, the newsletter of the Corporate Counsel section of the State Bar of Texas. The article describes how midstream oil and gas companies can find provisions in their midstream contracts that may provide remedies and relief in light of the downturn the energy industry is experiencing.

On 26 June 2020 the Corporate Insolvency and Governance Act 2020 ("the Act") introduced the biggest reforms in a generation of UK insolvency law.  It also implemented several temporary changes to both insolvency and company law to deal with solvency and governance pressures resulting from the coronavirus pandemic ("COVID-19".  These reforms were fast-tracked through the legislative process in the UK, representing a clear move towards a more debtor-friendly, "rescue culture" for companies facing financial difficulty.  In some respects they align UK insolvency law more closely with US insolvency law, in particular Chapter 11 proceedings under the US Bankruptcy Code. Our earlier briefing, COVID-19 Changes Announced to UK Insolvency Law and for AGMs, provided some background to these new reforms.

On 8 July 2020, the UK Chancellor of the Exchequer delivered a Summer Statement setting out the UK Government's 'Plan For Jobs', a package of measures intended to protect jobs and provide relief to sectors particularly hard-hit by COVID-19. The tax measures include cuts to VAT for the hospitality and tourism sectors and a temporary extension of the stamp duty land tax ("SDLT") nil-rate band for purchases of residential property in order to stimulate the UK housing market. There were also incentives to employers to create and retain jobs, particularly for 16–24 year olds at risk of long-term unemployment.

Partner Kris Ferranti moderated a discussion with fellow lawyers from Shearman & Sterling’s Real Estate, Tax, Financial Restructuring & Insolvency and Environmental practices about the opportunities that exist for investors in distressed commercial real estate assets and the legal issues and considerations they must keep in mind.

On July 2, 2020, the U.S. Internal Revenue Service (the IRS) and the U.S. Treasury Department (“Treasury”) promulgated temporary regulations under section 1502 of the Internal Revenue Code of 1986, as amended (T.D. 9900) (the “Code,” and such regulations, the “Temporary Regulations”) regarding waivers of consolidated net operating loss (CNOL) carrybacks. The Temporary Regulations allow a consolidated group (the “acquiring consolidated group”) that acquires a member (the “acquired member”) from another consolidated group (the “former consolidated group”) to elect to waive the carryback of post-acquisition CNOLs that are properly attributable to the acquired member to a taxable year of the former consolidated group. The Temporary Regulations address issues created by the five-year NOL carryback period that was retroactively added by the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”).

COVID-19 has acted as an accelerator, bringing into play scenarios which were previously only contingencies and making contingencies of (and requiring planning for) situations which were previously barely imaginable. The debt build-up from the corporate sector, in many cases kept going through governmental life-support, means that non-performing loans are likely to explode. Numerous companies are at levels of debt that mean they cannot realistically take on much more. Preferred equity investments are possible but provide less protection for the banks.

Partner Philip Urofsky and counsel Richard Gagnon authored an article for Bloomberg Tax titled “A Step Too Far? The IRS Proposes Non-Deductibility of Disgorgement.” The article argues that if proposed rules allowing deductions for disgorgement and forfeiture are retained, those disallowances will become yet another, albeit hidden, penalty. This would contravene sound public policy and the plain language of the statutory exception for restitution, the authors state.