Skip to main content

Nixon Peabody LLP

  • People
  • Capabilities
  • Insights
  • About
Trending Topics
    • People
    • Capabilities
    • Insights
    • About
    • Locations
    • Events
    • Careers
    • Alumni
    Practices

    View All

    • Affordable Housing
    • Community Development Finance
    • Corporate & Finance
    • Cybersecurity & Privacy
    • Entertainment & Media
    • Environmental
    • Franchising & Distribution
    • Government Investigations & White Collar Defense
    • Healthcare
    • Intellectual Property
    • International Services
    • Labor, Employment, and Benefits
    • Litigation
    • Private Wealth & Advisory
    • Project Finance
    • Public Finance
    • Real Estate
    • Regulatory & Government Relations
    Industries

    View All

    • Aviation
    • Cannabis
    • Consumer
    • Energy
    • Financial Services
    • Healthcare
    • Higher Education
    • Infrastructure
    • Manufacturing
    • Nonprofit Organizations
    • Real Estate
    • Sports & Stadiums
    • Technology
    Value-Added Services

    View All

    • Alternative Fee Arrangements

      Developing innovative pricing structures and alternative fee agreement models that deliver additional value for our clients.

    • Continuing Education

      Advancing professional knowledge and offering credits for attorneys, staff and other professionals.

    • Crisis Advisory

      Helping clients respond correctly when a crisis occurs.

    • DEI Strategic Services

      Providing our clients with legal, strategic, and practical advice to make transformational changes in their organizations.

    • eDiscovery

      Leveraging law and technology to deliver sound solutions.

    • Environmental, Social, and Governance (ESG)

      We help clients create positive return on investments in people, products, and the planet.

    • Global Services

      Delivering seamless service through partnerships across the globe.

    • Innovation

      Leveraging leading-edge technology to guide change and create seamless, collaborative experiences for clients and attorneys.

    • IPED

      Industry-leading conferences focused on affordable housing, tax credits, and more.

    • Legal Project Management

      Providing actionable information to support strategic decision-making.

    • Legally Green

      Teaming with clients to advance sustainable projects, mitigate the effects of climate change, and protect our planet.

    • Nixon Peabody Trust Company

      Offering a range of investment management and fiduciary services.

    • NP Capital Connector

      Bringing together companies and investors for tomorrow’s new deals.

    • NP Second Opinion

      Offering fresh insights on cases that are delayed, over budget, or off-target from the desired resolution.

    • NP Trial

      Courtroom-ready lawyers who can resolve disputes early on clients’ terms or prevail at trial before a judge or jury.

    • Social Impact

      Creating positive impact in our communities through increasing equity, access, and opportunity.

    • Women in Dealmaking

      We provide strategic counsel on complex corporate transactions and unite dynamic women in the dealmaking arena.

    1. Home
    2. Insights
    3. Articles
    4. NP Connects conversation with Nighan, Pedone, Marcelli

      Articles

    Article

    NP Connects conversation with Nighan, Pedone, Marcelli

    April 17, 2020

    LinkedInX (Twitter)EmailCopy URL

    By Christopher Keefe and Philip Taub

    Leaders from a variety of backgrounds share real-time perspectives on how the coronavirus (COVID-19) pandemic will unfold.

    Our NP Connects series brings together leaders from a variety of backgrounds to share real-time perspectives on how the coronavirus (COVID-19) pandemic will unfold over the months ahead. 

    Our April 16, 2020 conversation included guests Morgan Nighan, Rick Pedone, and Solita Marcelli. Click here to watch a recording of the session. 

    Here are our takeaways from the program: 

    1. The Small Business Administration (SBA) approved the full $350 billion allocated for the Payroll Protection Program (PPP) within the CARES Act as of April 16, 2020. The SBA approved in two weeks the same amount of money, $350 billion, that the SBA has approved over the past 14 years. This is historic.
    2. While the PPP is not accepting additional loan applications at this point as the initial funds have been exhausted and additional funds are being sought:
      • Some people applied for loans, were approved but have not received the loan. If you applied and were approved by both your lender and the SBA but have not received your funding, know that your loan amount was earmarked for you and will be disbursed within ten (10) days of approval.
      • Practical advice for those that did not submit loan applications yet: If your loan application was not approved by either your lender or the SBA, keep in contact with your lender and be ready to move forward if and when additional funds are made available. The current sentiment is additional funds will be approved by Congress as the need has only grown since the CARES Act was approved on March 17.
    3. Many borrowers are questioning what hardship certification in the PPP loan application means. Focus on how the present economic uncertainty has made it necessary to apply for this loan and document it. Practical advice: Convene a board meeting to document economic conditions and have the board certify that the loan is necessary and prudent. Make a truthful, accurate statement and keep records. A good-faith borrower that gets something wrong likely would only have to pay the loan back with interest.
    4. Once the PPP loan is received, companies have eight weeks to spend the money on approved expenses. You cannot choose when the eight-week period begins. The period commences when your loan is funded.
    5. With regard to the second source of stimulus approved under the CARES Act, the Main Street Lending Program (MSLP) is targeted for U.S. companies doing business predominantly in the U.S. with less than $2.5 billion in revenue and 10,000 employees. Loans under the MSLP may be made by any U.S.-insured depository institution, bank holding company, or S&L holding company. Lenders may either originate a new MSLP loan or use an MSLP loan to increase the size of existing loans. More details about the program are expected within the coming week.
    6. Practical advice: Begin calculating your eligibility now using the EBITDA to debt tests set forth. Be first in line to apply. Note that there is no forgiveness provision under the MSLP. MSLP loans increase your debt. You must certify to executive compensation caps, that jobs will not be sent off shore for a period of time, become subject to audits, and that you will not refinance existing debt with this money. Additionally, there are limits on distributions the company can make.
    7. Looking at the markets and the global economy, the key questions are how quickly can economies return to normal and when will the process commence. It is projected that quarantine restrictions will be lifted in May across parts of Europe and in June for the U.S. Thus, a subdued U-shaped recovery would commence in 3Q2020. At this point corporate earnings are projected to be down 20–30%. The S&P is expected to end at 2750, roughly where it is today. It is then expected that 2021 will be the year of recovery with earnings approaching 2019 levels at the end of 2021. Price to earnings ratios will remain lower as investors require a higher risk premium. Since the effects on lockdown and stimulus are not known yet, volatility in the capital markets will remain for months. Should additional outbreaks occur and economies remain shut longer, then an L-shaped recovery would result and the S&P would close the year lower at 2100.
    8. There are opportunities in the market as every asset was sold in a rush to the door to raise cash. Both good and troubled companies were heavily sold. Recognizing that the stimulus funds made available by the U.S. government are looking to prevent liquidity problems from becoming solvency issues, corporate bonds of solid companies offer limited downside and equity like capital appreciation opportunities. As of today, short-term, investment-grade credit offers an attractive yield pick up over risk-free Treasuries.
    9. While the U.S. equity market is fully priced, there are pockets of opportunities because the recent selling was indiscriminate. Two weeks ago people asked what to buy opportunistically and how should they protect their portfolio. Now questions revolve around long-term trends and the legacy of the crisis. The consensus is we will be more indebted, less global, and more digital:
      • While runaway inflation is a threat, federal bankers are more concerned with deflation.
      • Reliance upon foreign supply chains has revealed vulnerabilities surrounding critical health items and people will travel less for business and leisure because of fear of virus, additional screening tests for fevers, and the threat of being quarantined abroad.
      • The digital transformation of our lives accelerated at warp speed—what was a novelty until March is now essential—online ordering, e-commerce, telemedicine, and remote working solutions and the infrastructure to support it are all de rigueur.
    10. Distressed investors have not stepped into the market yet as people await the bottom to occur. Owners are not quick to take companies through bankruptcy yet as it is difficult to find a DIP lender and asset pricing is uncertain because it’s tough to value inventory and assets now. Thus, there is less activity. Additional liquidity provided by the PPP and MSLP have delayed the need for bankruptcy filing. There will be distressed M&A opportunities to acquire over-leveraged companies in the future and many family offices have cash available.

    Practices

    Corporate & Finance

    Insights And Happenings

    • Alert

      DEA proposes regulations for prescribing controlled substances via telemedicine

      March 2, 2023
    The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

    Subscribe to stay informed of the latest legal news, alerts, and business trends.Subscribe

    • People
    • Capabilities
    • Insights
    • About
    • Locations
    • Events
    • Careers
    • Alumni
    • Cookie Preferences
    • Privacy Policy
    • Terms of Use
    • Accessibility Statement
    • Statement of Client Rights
    • Purchase Order Terms & Conditions
    • Nixon Peabody International LLC
    • PAL
    © 2025 Nixon Peabody. All rights reserved