Insights – September 2020

Skadden, Arps, Slate, Meagher & Flom LLP

DOJ Update

Insights Conversations: DOJ Enforcement Priorities
Former U.S. attorney Jessie K. Liu recently joined Skadden from her role overseeing the U.S. Attorney’s Office in Washington, D.C. Litigation partners Bradley A. Klein and Gregory M. Luce discussed with Jessie the Department of Justice’s current enforcement priorities, including some that may result in new False Claims Act risks for individuals and entities to consider heading into 2021.

DOJ Compliance Program Guidance Shows Value of a Compliance Committee
A company can provide persuasive evidence to DOJ prosecutors that it is sufficiently committed to compliance by having a dedicated committee that oversees tailored compliance efforts and maintains relevant documentation, thereby positioning the company for a more favorable resolution.

Finance

Sustainability-Linked Loans on the Rise Despite COVID-19
While COVID-19 represented a shock to the global economy, in the long run the pandemic may become a catalyst rather than a dampener of the growing popularity of sustainability-linked loans, which were developed to promote environmental, social and governance policies and practices. Sustainability-linked loans provide incentives to borrowers to achieve their ESG goals.

Future-Proofing: How To Plan a Successful Exit
Ensuring that a company’s venture financing documentation provides for a smooth and orderly exit is more essential than ever in the current volatile economic climate. Founders and their companies should consider several key points to avoid unintended consequences as they approach an exit.

European High-Yield Market Responds to COVID-19
Despite the business interruption COVID-19 has caused, especially early in the year, the European high-yield market remains strong. Adaptation to the current environment and innovation in bond terms and covenants continue to characterize the high-yield market in these unparalleled times.

Governance

Planning Ahead: Virtual Shareholder Meetings in the 2021 Proxy Season
Although the future of the COVID-19 pandemic and the prospects for in-person shareholder meetings are unclear, companies have the ability to plan for virtual shareholder meetings in a more orderly and methodical fashion than they did for 2020 meetings. Companies may want to engage with their shareholders now to obtain investor feedback and prepare for “virtual proxy season 2.0.”

Litigation

Shareholder Derivative Suits Likely To Extend to COVID-19, Racial Equality
Companies can expect to see shareholder derivative litigation related to allegations surrounding COVID-19 and structural racism filed over the next year. Boards are well advised to actively monitor the company’s response to and disclosures on those issues to minimize their risk of exposure to such suits.

When Arbitration Meets Bankruptcy: Considering Arbitration Options in the Wake of a Growing Rise in Corporate Insolvencies
Companies with arbitration clauses in their commercial agreements may wish to consider the impact of insolvency on their options for pursuing pending or future arbitrations, especially as the long-term effects of COVID-19 play out as more companies consider restructurings.

Regulatory

Biden’s Tax Proposals: Considering the Impact on Corporate Taxpayers
The Biden campaign has put forth a variety of tax proposals that would retain the fundamental infrastructure of the Tax Cuts and Jobs Act but would, among other changes, raise the federal corporate income tax rate from the current 21 percent to 28 percent.

Developing a Diverse Workforce
With the Black Lives Matter movement and issues of racial equality more generally continuing to resonate, many employers are working to meaningfully enhance their approaches to attracting and retaining a diverse workforce.

FDA Oversight of Laboratory-Developed Tests Continues To Evolve
The Trump administration has reversed the FDA's position on its oversight of laboratory-developed tests, stating that such tests would not be subject to premarket review. Laboratories must now decide whether to voluntarily seek an emergency use authorization from the FDA for their tests or proceed without it. This latest development makes clear that lasting guidance is necessary for all parties to navigate the world of such tests with some measure of certainty, both during COVID-19 and beyond.

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