by Sara McEown and Bill Davidson  In response to the growing concern over the novel coronavirus (“COVID-19”), Greg Abbott, Governor of the State of Texas, issued an executive order (“Executive Order”) prohibiting certain activities across the State effective 11:59 pm on March 20, 2020. For a summary of the executive order, click HERE.

COVID-19 & the Market Decline: Material Adverse Change? by Hunter Barrow and Wade Johnson  Material Adverse Change or Material Adverse Effect (“MAC” or “MAE”) provisions act as a corollary to the doctrines of force majeure, impossibility, frustration, and commercial impracticability.  They are consistently used by parties in mergers and acquisitions and in obtaining debt financing.  Generally, they act as a condition or representation that there has not been a material adverse change in a party’s business or operations between the time the parties sign a transaction agreement and the close of that transaction.     In these uncertain times with COVID-19, it is likely that parties will increasingly invoke MACs or MAEs in disputes involving M&A deals and financing.  Judges, juries, and arbitrators will be asked to assess whether these provisions are truly triggered or whether parties are using them as a mere pretext.  When faced with a MAC, parties should consider the following when evaluating the strengths and weaknesses of their position.    How is the MAC defined?  Defined by Subject Matter: MACs are often defined by subject matter.  The financial condition of a party, such as certain assets and liabilities, can be used to define the provision.  Parties can also define a MAC as meaning any material adverse change in the quality or quantity of a party’s customers.  For example, in Nip v. Checkpoint Sys., Inc., the buyer of a printing business discovered that one week before closing, the seller’s second largest customer attempted to cancel all orders and move its business to a competitor.  The share purchase agreement generally defined a MAC as any change (or effect) in the financial condition or business that could reasonably be expected to adversely affect the business.  A Houston jury found in favor of the buyer, and the Fourteenth Court of Appeals agreed that the loss of business was a MAC because of the loss in future business prospects... Read More

Mechanic’s Liens in the Time of Corona by Jason Walker and Katy Baird    As business slow-downs become imminent due to the onset of the Coronavirus it is now more important than ever for contractors to secure their lien rights through the sending out of notices and recording of mechanic’s and materialman’s liens. Below are a few things to consider that might affect “business as usual” when preserving your lien claim: Are time extensions likely in this type of emergency? What will change about the lien recording process? How will I send notices if the Post Office shuts down? Will pursuing my lien claim in a time of crisis hurt my business relationships? Where can I look for reliable information about things that will impact my lien rights? All of these topics are discussed below as they relate to the preservation of Mechanic’s and Materialman’s lien rights pursuant to the Texas Property Code.   A. Time Extensions…Can you count on them?  In past emergencies, the Supreme Court of Texas has issued extensions for statutory deadlines based on the closure of government offices and inaccessibility of certain counties due to flooding/ storm damage. One such instance, Texans may recall, was Hurricane Ike, which hit Texas on September 13, 2008, and devastated a large number of Texas residents. The Supreme Court of Texas also issued an order asking all courts throughout the State of Texas to allow for the extension of litigation related deadlines for Hurricane Harvey victims in 2017. A key caveat to these Court mandated time extensions was that parties had to show they missed their deadlines/needed more time due to complications from the storm when arguing for the foreclosure of their liens. These instances differ from the Coronavirus state of emergency because, unlike the damage experienced by Texas in the wake of past hurricanes, the infrastructure of the State at present remains largely intact. While the United States, the State of Texas, and many of its individual counties have declared a state of emergency an extension of any statutory deadlines will likely not be granted unless government offices officially cease operations. At this time, there is no order in place which would allow for the extension of deadlines relating to lien notices and filings; therefore, it is important to remain diligent about preserving your right to payment on all of your open accounts.... Read More

COVID-19 and the Real Estate Market  by Jack Turano  As the novel coronavirus (“COVID-19”) continues its rapid spread throughout the world, the real estate industry is not immune. Below is some brief insight into the impact we’re seeing COVID-19 have on real estate.   Force Majeure The effects of COVID-19 are beginning to be felt in the real estate industry and the term “force majeure” is on the tip of everyone’s tongue. The force majeure clause allows a party to a contract to get out of certain obligations due to unforeseen events. In order for a purchaser or tenant to seek the benefits of the force majeure clause, a contract must first contain one. Depending on how a contract’s force majeure provision has been drafted, COVID-19 may or may not be an event that provides a defense to performance under the contract. For new contracts and leases, it is advisable to specifically reference COVID-19 or pandemics in the force majeure provision in anticipation of delays in performance.   Delayed Closings Federally mandated quarantines are preventing clients from timely reaching the closing table or from providing the opposite party with contract deliverables. In addition, purchasers may be questioning whether they can still obtain financing in the current market environment.  As a result of the foregoing, amendments to extend feasibility periods and closing dates may be necessary.   Property Management As we adjust to social distancing and elbow bumps, owners and property managers will be tasked with enacting and enforcing new policies and guidelines that are in alignment with the new government directives being issued to stem the spread of COVID-19. As such policies and procedures are put into place, owners and managers must consider the implications of employment laws and the terms of current leases. Owners and managers should also consider how they will respond in the event of exposure within the building, being mindful of lease confidentiality provisions and individual privacy... Read More

Celebrating 30 Years in 2020 Founded in 1990, with offices in Houston and Austin, Andrews Myers, Attorneys at Law, is a corporate law firm and recognized market leader in Texas construction law.  The firm focuses on the concentrated disciplines of commercial litigation, construction, commercial real estate, corporate and business transactions, with additional emphasis on related issues including bankruptcy and insolvency, energy, employment and capital formation. A seasoned team of attorneys provides timely and cost-effective solutions to the most complex problems facing entrepreneurs and middle-market industry leaders throughout the state and the nation. For more information please visit www.andrewsmyers.com.