Message from the Chair of the NCBA Business Law Section

By Ben Baldwin
Chair of the NCBA Business Law Section 

Dear Members of the Business Law Section:

Yesterday (Wednesday April 1, 2020) Governor Roy Cooper issued Executive Order 125 (“Authorizing and Encouraging Remote Shareholder Meetings During the COVID-19 State of Emergency”).

The Order, which is limited in effect to corporations holding shareholder meetings under the North Carolina Business Corporation Act (the “Act”), is intended to facilitate the holding of shareholder meetings against the backdrop of the Governor’s prior Executive Orders (and various municipal orders) limiting mass gatherings during the COVID-19 crisis.

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How Can We Help?

Afi S. Johnson-Parris
Chair, NCBA Family Law Section

The past few weeks have been surreal. With the rising crisis of COVID-19, we’ve had to adapt and change every plan we’ve had for the Family Law Section, our annual meeting, our CLE, and much of the business of the Association. We face the very real possibility that our practices and our lives will be damaged in ways that we can’t fully imagine.

In chaotic times, it helps me to focus on what I can do to help. We can all help in some way, and that’s what the leadership of the Family Law Section has endeavored to do.

At our last meeting of the Family Law Council, we voted to donate $5,000 of our Section funds to the Jane B. Weathers Lawyers Helping Lawyers Fund. This Fund was established upon the retirement of a long-time association staff member, Jane Weathers, to provide grants to lawyers experiencing financial hardship due to unforeseen difficult circumstances. Be it medical, personal, or professional challenges, the Fund is there to help.

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NCBA YLD COVID-19 Wellness Club

As a way to stay connected and highlight your wellness while isolated under the state’s Stay at Home Order, from April 1 through May 3, the NCBA YLD is inviting all young lawyers to upload their wellness-related activities through Strava, an app designed to connect and track exercises using GPS data. Strava is completely free with no advertising in its mobile application. Here’s how you can join in the fun:

  • Register for Strava online or downloand the app;
  • Go to the “Explore” tab and click on “Clubs”;
  • Search for the club titled “NCBA YLD COVID-19 Wellness Club”;
  • Join the club; and
  • Start logging your activities

The activities can be anything: walking, running, cycling, high-intensity interval training workouts, CrossFit, yoga, or whatever it is you like to do. Be sure to sync your watch or other fitness wearable with the Strava app on your phone so your workouts or activities will automatically upload. No manual upload is needed!

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COVID-19 Criminal Justice Update (Apr. 1, 2020)

By Daniel Adams 

With coronavirus infections multiplying exponentially around the globe, countries, states, and localities are taking action to slow the spread. This update does not attempt to recount all that has changed since my last post. In particular, I do not catalogue all the state and local stay-at-home orders that have been enacted—though the North Carolina Judicial Branch’s COVID-19 Resource Page appears to have aggregated them all. Rather, I focus just on recent developments involving North Carolina state and federal courts and of particular interest to criminal justice practitioners.

[Note: This post was updated on April 3, 2020, as reflected below.]

NC State Courts

As reported earlier, Chief Justice Cheri Beasley previously entered an order extending filing deadlines and certain limitations periods in the trial courts through April 17, 2020. After some initial debate about whether Justice Beasley’s order applied in the Business Court, Chief Business Court Judge Louis Bledsoe answered that question in the affirmative, by order entered May 23. There was no doubt that Justice Beasley’s March 19 order did not apply to filings due in the appellate courts. Late last week, however, Justice Beasley entered another order extending all appellate court deadlines that fall between March 27 and April 30, 2020, for 60 days. The March 27 order also encourages electronic filing and credits back secure-leave scheduled in April and May 2020.

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Small Business Lawyer’s Guide to CARES Act Funding

Ritchie Taylor

Bradley S. Wooldridge

By Ritchie Taylor and Bradley S. Wooldridge 

The Coronavirus pandemic has caused an unprecedented halt to our otherwise healthy economy. Senate Republicans and Democrats, along with Secretary Mnuchin and the Trump administration, have been working since late last week on what they have referred to as the Phase III of the COVID-19 legislation, which is largely a stimulus bill to provide much needed liquidity to both large and small businesses, as well as individuals, to assist in bridging the financial gap anticipated by this economic halt.

The Senate passed the stimulus bill, H.R. 748, the “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES Act” on the evening of March 25, the House passed the bill on March 27 and it was signed by President Trump into law the same day.

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Do I Have Business Insurance for Coronavirus Losses?

By Susan Boyles

The coronavirus has turned all of our lives upside down in the past two weeks. Who would have dreamed that we would be required to work from home, courts would be operating on a drastically reduced schedule, the NCAA Tournament and the Summer Olympics would be cancelled, and toilet paper would become more valuable than most stocks? (I don’t even want to look at my 401K plan right now!)

While we are waiting for the world to go back to “normal,” I have been pondering what all of this disruption means for insurance claims. Initially, there may be little increased claims activity as businesses focus on how to react to the ever-changing economic climate and try to keep their employees healthy. However, after the threat of the virus is diminished and business stabilizes, many companies will step back and gauge the real impact on their bottom line and ask the question: “Do I have insurance to cover this?” The answer is “maybe,” based on the type of policies purchased before the virus and the terms of each policy. However, if you’re trying to find coverage, here are some places to look:

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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, [email protected].

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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