The COVID-19 pandemic sweeping across the United States has triggered unprecedented disruption of corporate America. The virus’s dangers and the speed at which it spreads through the population have caused state and local governments to force most “non-essential” businesses to temporarily scale back or even cease operations, resulting in many otherwise healthy companies facing financial distress and potentially teetering on insolvency. These companies’ directors understandably may have questions about how this sudden change in financial health impacts the fiduciary duties they owe to the company.

And as state and local governments take steps to allow businesses to reopen and resume operations, directors of distressed companies must make a number of important decisions including whether to reopen and, if so, how and when to resume operations, whether to seek bankruptcy relief and whether to take on more debt to fund operations. As they make these determinations, directors may reasonably question what role COVID-19 should play in their decision-making process.

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