Update on Closures, Extensions, and Staying at Home – COVID-19

Jacob Morse

PJ Puryear

By Jacob Morse and PJ Puryear

Last week, NCBA Litigation Section members provided an overview of court closures and deadline extensions due to COVID-19. This post is to provide an update, as well as to highlight resources that have become available to practitioners and the public.

Trial Courts

On Friday March 13, 2020, Chief Justice Cheri Beasley of the Supreme Court of North Carolina entered an order continuing most District and Superior Court hearings and trials which were scheduled to take place between March 16, 2020 and April 16, 2020. On March 19, 2020, the Chief Justice issued a second order affecting most filings and acts which were due to be filed or done from March 16, 2010 through April 17, 2020. These orders removed the affected hearings or trials from court calendars and extended all deadlines for filings and other actions (which we believe includes, but is not limited to items such as discovery) through April 17, 2020. On March 23, 2020, Chief Judge Louis Bledsoe of the North Carolina Business Court entered an administrative order formally stating that the Chief Justice’s March 19, 2020 order also applies to all matters pending in front of Business Court Judges.

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Legal Feeding Frenzy Update

Michele Livingstone

Erin Ball

By Michele Livingstone and Erin Ball

CONGRATULATIONS! And, thank you. With your help, the Legal Feeding Frenzy has surpassed its original goal of $75,000 / 300,000 pounds of food! There are now 2 days left in the frenzy!

There is no denying that we have entered an unprecedented and unpredictable time as a result of COVID-19. But we are so encouraged by how our colleagues continue to answer the call to help our neighbors in need through efforts like the LFF. When we set our original LFF 2020 goal, we had not yet heard of or anticipated the wide-spread effects of COVID-19. As stay at home orders go in place across the state, schools extend their closings, and businesses are forced to close and lay off employees, we’re going to continue to see a strain on our local food banks as demand continues to increase.  Accordingly, we have decided to increase the #LFF2020 goal to help meet these needs.

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OAH Chief Judge Activates Emergency Hearings-Related Waiver

Due to the state of emergency that has been declared by North Carolina’s Governor in response to the COVID-19 crisis, the Director of the Office of Administrative Hearings (OAH) has invoked the emergency waiver found in 26 NCAC 01 .0105 for the purpose of waiving all time limitations contained in all Sections of 26 NCAC Chapter 03 – Hearings Division, except 26 NCAC 03 .0127. (The time limitation in 26 NCAC 03 .0127 applies only to administrative law judges).

This waiver applies to all contested cases now pending and hereafter filed at OAH until this waiver is revoked.

Please direct any questions regarding the notice to:

Bill Culpepper, General Counsel, (919) 431-3000, bill.culpepper@oah.nc.gov.

The Art of Negotiating Working Capital in M&A Transactions

Kenneth H. Marks

John A. Howard

By Kenneth H. Marks and John A. Howard

The selling process for a privately held company has many nuances, including the analysis of the total value of a transaction.  For the experienced seller and their team, terms and conditions of the deal can be just as critical as the purchase price.  One of those key terms is called the working capital target.

In accounting terms, working capital is equal to current assets minus current liabilities. In middle market M&A transactions (those beyond the small, Main Street asset deals), the selling company is typically expected to deliver a normalized level of working capital (which is defined slightly differently from the accounting definition, as we discuss later) to support the operations of the business post-closing. Calculating the working capital and figuring the basis for the analysis is somewhat of an art and often changes depending upon the norms within a specific industry. Historical trends can be a sound baseline for establishing the target amount. The argument that a buyer can operate the seller’s company with less working capital than the seller is hard to defend without evidence. In growth financings, tightening the working capital cycle can provide a cheap and quickly accessed source of funding. In both M&A and growth financing, optimizing the working capital cycle and assuring efficient use of this capital will increase the value of the business by decreasing or minimizing the capital required to fund the operating cycle.

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COVID-19 Relief Information for Small Businesses from U.S. Department of Commerce

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Construction Law Alert: COVID-19’s Impacts on Construction Projects

This article was originally published by Nexsen Pruet and has been reposted with permission.

By Eric H. Biesecker

COVID-19 and the ensuing shutdown of much of the economy will affect construction projects dramatically. Projects have become more difficult to perform as industry participants juggle their obligations to their customers, employees, and the public. The impacts will get worse before they get better. This article identifies some construction law issues facing owners, contractors, subcontractors, and suppliers grappling with the impacts of the virus.

When a contractor or subcontractor cannot meet the project schedule, does COVID-19 excuse the delay and warrant a time extension? It depends on the language of the contract. As discussed by my colleague, David Robinson, in his March 3 Insight, in most US jurisdictions, epidemics, pandemics, and other unforeseeable Acts of God do not automatically excuse breaches of contract. In order to determine whether COVID 19 provides an excuse, begin by looking at the terms of the relevant contract.

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Additional Updates from the Industrial Commission: Secure Leave / Document Signing

By Eleasa Allen

The Industrial Commission continues to review and evaluate its various policies in light of the ongoing COVID-19 situation. Below are the most recent updates from the Commission concerning its Secure Leave Policy and accepting agreements signed through DocuSign.

COVID-19 Response: Industrial Commission Secure Leave Policy

The Industrial Commission recognizes that the COVID-19 pandemic will result in attorneys having to reschedule vacations, non-emergency medical procedures, and other plans for which secure leave was obtained. The rescheduled plans may then fall within the same calendar year for which three weeks of secure leave already has been granted and/or may not be known until less than 90 days before the requested secure leave period. Any attorney faced with this situation may file a motion under 11 NCAC 23E .0301 (Waiver of Rules) asking for a waiver or variance of the requirements or provisions of 11 NCAC 23E .0104 (Secure Leave Period for Attorneys). This motion should be filed in conjunction with the new secure leave written request.

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Notarization During the COVID-19 Crisis

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Laura Linfante

Pam Deeds Stewart

By Lori Linfante and Pam Deeds Stewart

The COVID-19 crisis has not affected the Notary law in North Carolina. However, the NC Secretary of State’s Office has issued guidance on how to comply with the in-person appearance requirements in this time of practicing social distancing. Some steps that can be taken to reduce exposure to the Notary and the principal (“signer”) are the same as the recommended COVID-19 precautions we should all be practicing such as not shaking hands, cleaning your hands often, cleaning and disinfecting frequently touched surfaces and keeping a 6-foot distance from others. Specific suggestions when notarizing documents are to not share pens (ask the signer to use their own pen), viewing the identification from the tabletop instead of touching the identification, and standing at the opposite ends of a long conference table. Some firms are offering curbside notary services or other outside options as ways to keep their employees and clients safe. These Notary challenges will be increased for parties that reach an agreement while they are participating in a mediation conducted via electronic means. It will be a process of getting the documents to each party at their location and then having them signed and notarized.

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Fight Hunger, Help Others in the COVID-19 Pandemic – Participate in the Legal Feeding Frenzy and Support Your Local Food Bank!

Michele Livingstone

Will Quick

By Michele Livingstone and Will Quick

Our section membership has a strong tradition of supporting and participating in pro bono and community service activities—both those planned and sponsored by the NCBA and those that you undertake on your own or with other organizations. We are in unprecedented times with COVID-19 (Coronavirus), and I am confident that each of you is doing your part.

Even in the best of times, however, over 1.5 Million North Carolinians struggle with hunger—of those nearly half a million are children. With public schools and many religious and nonprofit organizations that traditionally serve the food insecure in our communities being closed for indefinite periods and government leaders calling for social distancing to help limit the spread of Coronavirus, that need is never more pressing than now.

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Report from Real Property Section Council Meeting

By Brian Z. Taylor

Real Property Section Members,

I hope that you are managing well in this COVID-19 world we find ourselves in today. It is an understatement to say that it has definitely changed our lives and had drastic effects on how we conduct our law practices and businesses. I want to let you know that your Council and NCBA leadership have been working diligently with other groups involved in the real estate industry to help keep us “open for business” and develop alternatives that may be necessary to allow that to happen. The Council held a special call in/Zoom meeting this past Monday to discuss and strategize on what is happening and what may need to happen.

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