May the Force Be With You!! Force Majeur
Originally Published : March 13, 2020
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|Dear HL Client,|
In today’s edition of we will address acts of God — and acts of Cuomo, DeBlasio and Meyer. It’s been an eventful day so let’s get to the news.
HEADLINE OF THE DAY
UNION SQUARE HOSPITALITY CLOSES ITS DOORS!!
At the close of today’s lunch shift, Union Square Hospitality Group announced that it would close all 19 of its restaurants until further notice. in the wake of this pandemic. Danny Meyer has announced, according to various reports, that employees will be paid through March 18, 2020 at the paid time off rate and then be allowed to use any remaining paid time off. Once they’ve exhausted their paid time off, they will be placed on “unpaid leave” and may be eligible for unemployment.
Employees were told that they were not being terminated, but would hopefully be “re-called” upon the restaurants’ re-opening. USHG has also announced that it will cover any Coronavirus-related medical expenses for those employees not otherwise covered by health insurance.I want to give this some thought and will then address tomorrow. But we have to think about this – If you want to stay open, when will you close? What event will trigger the decision to shut it all down? When one of your employees gets sick? One of your customers? A vendor? Then, when that thing happens and you decide to shut it down, you will have to do it on the fly.
Does it make sense to get ahead of this and accept that you have little time to stay open anyway? Close on your own terms and wait it out? These are things that I’m talking to all of you about and what I’ll be thinking about tonight.
PANDEMIC = FORCE MAJEURE?
Force Majeure is one of those cool sounding legal words that means “superior force” in latin or “some crazy unforeseen shit” in our world. Force Majeure clauses pop up in your leases, catering contracts and insurance policies and they are supposed to grant relief in times like these when some unexpected thing happens. Sounds great, but here’s the key: no force majeure clause is exactly the same. These provisions be read and interpreted on a case-by-case basis as the language used in these contracts ranges in scope and specificity. So while some of the more general provisions define a force majeure event as an “act of God” – which have customarily included natural disasters like hurricanes or earthquakes – the more specific iterations of this provision will include a detailed list of events that trigger these protections. Some contracts even specifically list “pandemic” as a force majeure event.Insurance – call your broker, tell her to put your carrier on notice and file a claim for business interruption. Heck, why have insurance if you can’t collect on something like this? I spoke to some brokers today and they all think the claims are likely to get denied unless the city or state shuts down the city or forbids people from eating out at all. Whatever, let’s all file claims and see if we can fight it.
Leases – Some leases contain Force Majeure clauses that allow for rent abatement. It’s time to pull out the lease and see what it says. We can help you with this of course. Then, if we feel like we have a case, we can hit up the landlord and let him know that we expect a rent abatement. Just don’t expect our lovely landlord population to accept it without a fight. Again, we advise you to pay your rent while we figure this all out.
Contracts – If you are a caterer…well, we know what you are going through right now with all of the cancellations and refund demands and upset brides etc.
So, check your force majeure clause and reach out if you need some help understanding them.
YO, MR. GOVERNOR!
On Thursday, March 12th, Governor Cuomo announced that the legal capacity of any venue which seats less than 500 people must be reduced by 50%, effective at 3:00 pm on March 13, 2020. So, what does what does “legal capacity” mean in this situation? Based on the Governor’s speech and clarification thereafter, this reduction applies only to your seating count–not total numbers of persons. Let us get this straight, by reducing the number of seats in restaurants it will be safer to eat there? How does that make any sense? You can have an orgy in the bar area if you want but you can only have half the seats? Deep government thinking at its finest. If the Governor wanted to make restaurants and bars safer, he could require a certain amount of space between tables and chairs or maybe enact more stringent hygiene rules or a million other things like maybe just ripping off the bandaid and shutting it all down. You trust us to prepare and serve food to the public but not to keep our restaurants safe otherwise?
Now, we have to deal with this wacky, half-baked, arbitrary, 50% sales killer of an edict. We still don’t know how they will enforce or what the penalties will be if you are found in violation. You can bet that we will be hearing about any movement on this after tonight and will report back as soon as we know something. COURTS ARE CLOSEDEffective Monday, March 16, 2020 all New York State and City Courts will effectively be closed with limited exceptions for certain criminal matters. We are told that each courthouse and judge will distribute specific instructions for when and how normal operations will resume. If you have a current legal matter before a Court, your attorneys will contact you next week to discuss any specific impacts to your case. Also, while we do not know the full scope of this yet, the Chief Judge of the State has ordered that the NYC Housing Court has imposed a one-week moratorium on all evictions in NYC, subject to further extensions. How this applies to commercial spaces is something we are paying close attention and will keep you updated.
NYC SMALL BUSINESS LOANS
Many of our clients have expressed their interest in participating in one of the financing programs that NYC announced earlier this week. Unfortunately, we still don’t have more information regarding NYC’s small business loan or grant programs. The city still suggests businesses sign up for emails and to fill out a web based survey, linked here, to obtain additional information. Here is a link to the City’s website discussing the program.
FAQ’s OF THE DAY
We will be updating these FAQs daily so you can easily refer to them and use them as a reference. All of these questions are being compiled on a website located at http://www.helbraunlevey.com/coronavirus and we encourage you to check this site for updates and additional resources for you, your staff, and your guests. Please keep in mind that the present situation has essentially continued to change on an hourly basis, so the following information is provided to our clients with the understanding that it is accurate and current as of March 13, 2020 at 7:00pm. I have food and supplies that are going to spoil. Can I donate it? Are there any risks associated with this?
Any business, nonprofit, school, government agency, religious organization, or community group located in New York City is eligible to donate or receive food through the donateNYC food portal, https://www1.nyc.gov/assets/donate/site/DonateFood/About. Donors must list if an item contains or has come into contact with any of the following allergens: milk, eggs, fish, crustacean shellfish (e.g. crab, lobster, shrimp), tree nuts (e.g. almonds, walnuts, pecans), peanuts, wheat, soy, and sesame.
Though keep in mind that no good deed usually goes unpunished. Generally, food donations to nonprofit organizations are protected from liability (e.g., food poisoning, allergies, etc.) under the Bill Emerson Good Samaritan Food Donation Act. This Act protects good faith food donors from civil liability if a product later causes harm to its recipient.
Therefore, if a food donation was made in good faith and later causes an injury, the donor will not be held liable for that injury. As a consequence, we do not recommend making any direct donations to individuals or persons unless it is to (or through) a non-profit organization to limit your liability. The last thing you need is to be hit with a lawsuit because someone had an allergic reaction or chipped a tooth from your donated food.
Other non-profit places to donate your perishable food include food banks, such as the Bowery Mission, https://www.bowery.org/, City Harvest, https://www.cityharvest.org/, and the Food Bank of New York, https://www.foodbanknyc.org/.Do you have any updates on tax moratoriums?
As of March 13, 2020, New York City Mayor Bill de Blasio said earlier this week that the city will offer no-interest loans to businesses with fewer than 100 employees that have seen sales decrease 25% or more. The loans of up to $75,000 are designed to mitigate losses in profit. In addition, the city is offering small businesses with fewer than five workers a grant to cover 40% of payroll costs for two months, an average of $6,000, to help retain employees. Eligible owners who would like to learn more about these programs should call 311 for assistance, or visit, https://www1.nyc.gov/office-of-the-mayor/news/124-20/mayor-de-blasio-provides-on-new-york-city-s-covid-19-response.Any updates on Trump’s announcement on tax deferrals?
As of March 13, 2020, there Treasury Department nor has the IRS not issued an official statement yet. We will keep monitoring. What about Federal Loans through the SBA?
Additionally, we have learned from our network of contacts, that since NYC has not been officially declared a disaster area as of yet, NY/NYC has not been claimed a disaster area yet. However, if and once it is declared a disaster area, you will be eligible to apply for an SBA loan for up to two million dollars over 2 years at 3.75% (2.75% for Non for Profits). A part of the application process is completing a personal financial statement for all general partners plus any partner than owns 20% or more. Click here for more information, https://www.sba.gov/sites/default/files/2019-09/Form%20413.pdf.
This will be helpful for the application process once it has opened. As more information comes to surface, we will continue to update you and your team’s accordingly.We will be updating these FAQs daily so you can easily refer to them and use them as a reference. All of these questions are being compiled on a website located at http://www.helbraunlevey.com/coronavirus and we encourage you to check this site for updates and additional resources for you, your staff, and your guests. Please keep in mind that the present situation has essentially continued to change on an hourly basis, so the information provided here is accurate and current as of March 13, 2020 at 7:00pm. If you have any questions or concerns regarding COVID-19 and how to best prepare for, and protect your business from this growing threat, please do not hesitate to contact Lee at (212) 219-1193 or through email at [email protected], or any other member of the Helbraun Levey team.
A QUICK NOTE TO OUR CLIENTS FROM LEE AND MEGAN
Over the course of the last 24 hours, we’ve been fielding a high volume of calls and emails from our clients. Your questions and concerns have really helped us understand the issues that you’re facing, so please keep ‘em coming! We will continue tackling the most common questions in our regular email updates, but please know that we are continuing to answer any and all specific questions as quickly and thoroughly as possible as they come through to us.
We are committed to getting you the most current and accurate information, while also prioritizing the stuff that we’re finding to be the most relevant on an hour-to-hour basis. We’re in this together.Hang in there and keep on truckin”. David