As the COVID-19 pandemic continues to unfold across the country, voluntary self-isolation efforts and a proliferation of state and local “shelter-in-place” orders have brought business activity to a screeching halt.  As business leaders work feverishly to consider the options available to safeguard their companies, we recommend that they keep in mind the three C’s: Care, Cash, and Communicate.


Your employees are your most important asset.  While the danger COVID-19 may ultimately pose to our society is yet to be determined, taking care of your employees is good for them and their families, good for your business, and—ultimately—good for the country.  Familiarize yourself with the new rules and opportunities provided by the Families First Coronavirus Response Act and how it may impact your business and your employees.  As you step through the Three C’s, liquidity is one of most important factors following Care for employees.  The FFCRA is a unique act and applies to employers with less than 500 employees.  Taking care of your people will include paying careful attention to this act.

Employees at this time will be facing many challenges.  From learning to work at home to distractions with children, employees will all be learning the WFH protocol.  Some learning curves and ramp up periods should be expected.

We view this time as a watershed event in many ways as the ability to work from home is tested in any number of industries.  Part of caring for people and our businesses will be to monitor the legal issues associated with a disparate work force including labor and employment as well as security issues.  A checkup from your legal provider on these topics may go a long way to providing Care.


For a company in distress, cash is king.  In a best-case scenario, taking prudent steps to conserve cash may help a company to survive what lies ahead.  For others, it can buy time for the company to evaluate strategic alternatives while it still has the means to act.  How much cash do you have now and, based on your typical “burn rate”, how long will that cash last?  That’s your runway.  Next, what steps can you take—what business “levers” can you pull to extend that runway.

As a general rule, there are only two ways to change liquidity—find more cash or reduce expenses.  In the current economic climate with businesses shuttering and consumer spending sinking to unprecedented levels, many companies are scrambling just to maintain historical revenue levels.  Nevertheless, businesses should take this opportunity to identify available credit lines or other sources of liquidity that may be drawn.  For most businesses, any additional runway will come from the expense side of the ledger.  We recommend that our clients act quickly to triage their upcoming expenses according to what must be paid to maintain business activity, what can be deferred, and what may need to be paid (e.g., payroll and sales taxes) to avoid creating new problems for the business and its management like personal liability for the control persons responsible for making such payments.  For many businesses, this will lead to tough decisions for but the time to act is today—not tomorrow.


Wine and whiskey may improve with age, but business and liquidity problems do not.  Be proactive in contacting your landlord, your lender, and your major vendors and suppliers.  There is virtually no market sector that is left unaffected by the current economic downturn, and there is a consensus that the virus-induced reduction in market output will begin to mend as soon as people can safely return to their normal routines.  Mortgage lenders like Fannie Mae and Freddie Mac have released temporary guidelines to provider borrowers with payment relief, and we anticipate that many other lenders and landlords will adopt a similar strategy to help limit the impact of the economic downturn and simultaneously position themselves—and their tenants and borrowers—for a more energetic recovery.

The Restructuring & Insolvency Team at Reed Smith stands ready to advise you on the issues above or others you may face in response to COVID-19.


Our Reed Smith Coronavirus team includes multidisciplinary lawyers from Asia, EME and the United States who stand ready to advise you on the issues above or others you many face related to COVID-19.

For more information on the legal and business implications of COVID-19, visit the Reed Smith Coronavirus (COVID-19) Resource Center or contact us at