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The corona virus

The corona virus affects Norwegian business life and Norwegian businesses within many sectors. There are many different questions and issues related to the spread of the corona virus and what measures employers can take to secure operations, limit infection and safeguard the interests of both companies and their employees. Force majeure in contracts with clients and collaborating partners is a question we have received many enquiries about lately.

We have created an overview of our specialist areas, some topics that are particularly relevant within these areas and contact information for our experts. You are welcome to contact us if you have any queries or want legal assistance – your questions will be dealt with promptly and confidently. 

You may also, as usual, contact your regular lawyer at our firm. 

EMPLOYMENT LAW

In light of the corona virus outbreak, many businesses have felt obliged to lay off all or part of their workforce. Temporary redundancy is a special Norwegian measure that allows employers to reduce payroll costs very quickly. In principle, notification of layoffs must be submitted with a notice period of 14 days. The measures the authorities have taken to prevent the spread of infection and to ensure that the pressure on the health service does not become unmanageable, create unforeseen situations for many companies. Notification of layoffs can now be submitted with a notice period of 2 days.

Our Employment Law department is ready to assist companies with advice on what can be done and how to deal with a whole new reality. 

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Contact: Knut-Marius Sture ( / +47 982 94 624) and Frode Martin Toftevåg (+47 920 45 476)

FINANCING LAW

The corona virus creates a challenging situation for both borrowers (companies) and lenders (creditors). The rapid decline in both the Norwegian and international economy will mean that many borrowers (companies) will have financial problems that will affect their loan commitments / debt obligations. This may, in turn, be challenging for lenders and other creditors. Borrowers and lenders should enter into an early dialogue with a view to putting in place a long-term plan if this is deemed necessary to maintain sufficient liquidity (and thus continued operations) in the coming months.

Arntzen de Besche has one of Norway’s leading specialist environments within both financing and general contract law, and can assist with advice on how best to handle such a situation for both borrowers (companies) and lenders (creditors). 

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Contact: Trond Kildal ( / +47 982 94 632) 

CONTRACT LAW

The corona virus and the measures taken to combat this could affect a number of contractual relationships. In some cases it may become impossible to comply with the contract, while in other cases there may be a change in balance, delays or other negative consequences. The question of how to best handle the change in circumstances has a number of legal, practical and strategic aspects.

Arntzen de Besche has a leading specialist environment for contract law and we assist a number of clients in various industries with such issues. Our goal is to help our clients find the best possible path through the demanding situation that has arisen.

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Contact: Andreas Nordby ( / +47 408 63 813)

CORPORATE LAW

The corona virus raises challenges for Norwegian companies, ranging from practical questions related to the procedure for holding board meetings and the annual general meeting, to sound business planning during a recession and the board’s duty to act in the event of loss of equity. In extraordinary situations, such as now, the board’s duty of activity is intensified, and it must consider the need for changes in the business and adapt the company in order to survive a demanding period. 

Arntzen de Besche has one of Norway’s leading specialist environments within corporate law related strategic and practical business advice, and can assist with advice on how to best handle such a situation for both the company and its shareholders.

Contact: Susanne Munch Thore ( / +47 911 36 899) 

CAPTAL MARKETS

The capital market in Norway has been strongly impacted by the corona virus and listed companies must be especially aware of the challenges this entails for the companies’ disclosure obligation and access to financing in the capital market, among other areas. In a situation such as the present, the market is expected to fluctuate more than normal, and this heightens the requirement for handling the company’s ongoing disclosure obligation. On this note, the board must consider the need for a profit warning, for example. More difficult access to capital will also challenge the requirement for equal treatment of shareholders and other “stakeholders”.

Our lawyers have extensive experience in advising listed companies and other parties in the capital market during periods of up- and downturns, and can assist with guidance on how these companies should best handle a situation like the current one.

Contact: Marianne Sahl Sveen ( / +47 908 41 897)

RESTRUCTURING AND INSOLVENCY

With the corona crisis, many companies experience an unexpected loss of revenue and thus reduced liquidity. Many companies also have a high debt ratio and may therefore encounter insufficient liquidity (illiquid) in the coming months. Several companies will have to undergo financial restructuring and some will have to undergo a complete restructuring to ensure continued operations and thus avoid bankruptcy. Arntzen de Besche has long experience in assisting companies and creditors, with both financial restructuring, e.g. negotiating liquidity facilities and/or easier terms and conditions under existing loan agreements, and we have long experience in completing/managing a full restructuring.

Our team will be able to provide a very quick response to acute problems and can contribute to long-term plans to ensure a sustainable financial platform and secure value for all stakeholders. 

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Contact: Stein Tonning ( / +47 416 69 411) or Trond Kildal ( / +47 982 94 632) 

STATE AID

For many, it will seem unnecessary to think about the EEA Agreement’s prohibition on state aid during times when the pandemic is raging around the world and to a large extent also here in Norway. Also in times of crisis, the competition authorities are active and sometimes more active to ensure that competition in the EEA market is safeguarded. In principle, the EEA Agreement prohibits state aid, cf. Article 61(1) of the EEA Agreement. In a Norwegian context, the EFTA Surveillance Authority (ESA) is the relevant authority to approve national aid schemes. The EEA Agreement offers considerable leeway and in such situations, it is not a question of whether aid is obtainable, but rather how much aid is needed.

Contact: Espen I. Bakken ( / +47 982 94 651)

CONSTRUCTION LAW

The construction and building industry is greatly affected by the pandemic and the government’s measures. There is reason to believe that the situation will lead to a complete or partial halt in work that is necessary to maintain planned progress in the projects. There is also reason to believe that industry players will incur increased costs and losses, and that several of them may encounter liquidity problems. Many are uncertain about how existing contracts will be affected by the pandemic. When can you invoke force majeure, are you entitled to a time extension or remuneration adjustment and how should you notify? Many also need advice on how to deal with new contracts. We are ready to assist building owners, contractors and other stakeholders with both general and specific advice. 

Contact: Knud Jacob Knudsen ( / +47 419 16 582)

REAL ESTATE

The corona virus creates a challenging situation for both property owners, developers, tenants and contractors. The rapid decline in both the Norwegian and international economy will mean that many companies will have financial problems that will affect their ability to service their obligations and fulfill contracts. This can again be challenging for the real estate and construction industries. Landlords, tenants and contractors should enter into an early dialogue with a view to laying out a long-term plan if this may be considered necessary to maintain sufficient liquidity (and thus continued operations) in the coming months.

Arntzen de Besche has one of Norway's leading legal environments in commercial real estate, development projects, syndication, financing, construction and general contract law and can help deal with the difficulties the real estate and construction industry are experiencing.

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Contact: Hans Henrik Kværne (+47 982 94 548)

PUBLIC PROCUREMENT

The corona virus will have consequences for public procurement. The deadlines and procedures in the procurement regulations are not aimed at states of emergency, however, the regulations make it possible, under specific conditions, to make urgent procurements, negotiate without announcing a tender, amend existing contracts, extend tender periods and enter into partnerships, etc. For both buyers and suppliers, it will be necessary to show greater flexibility than usual, while also, to the extent possible, taking into account competition, equal treatment and verifiability, etc., in order to avoid irreparable damage. 

Contact: Svein Terje Tveit ( / +47 950 62 685)

COMPETITION LAW

The corona virus leads to imbalance in the markets. For many Norwegian companies, this effect is compounded by the large drop in oil prices. A great number of companies will soon be struggling with liquidity, and there may be a need to cooperate with competitors and other industry players in ways other than under normal circumstances. However, the Norwegian Competition Act’s ban on anticompetitive cooperation and abuse of a dominant position still applies, at least as an overall principle. We can assist your company in drawing up the limits of what is legally permissible under these circumstances. The crisis we are in may also provide a basis for acquisitions and mergers that have not been seen previously, including between competitors. This may, among other things, raise questions about exceptions to the standstill obligation in the Norwegian Competition Act and whether the so-called failing firm defence can apply, i.e. whether a business is allowed to take over a competitor that would otherwise have gone bankrupt.

Contact: Stein Ove Solberg ( / +47 982 94 589) 

OFFSHORE, OIL SERVICE AND SHIPPING

Suppliers to the oil industry may be affected by the drastic market changes resulting from the corona virus. Oil companies are now experiencing a steep fall in demand for oil and gas. This may affect their investments and purchases, and existing agreements can also come under pressure. Further, suppliers may find that their ability to deliver under existing contracts is reduced. The corona virus may cause a number of disruptions that could affect the ability of suppliers to fulfil their obligations. Questions may arise about force majeure, which may provide a basis for setting contractual obligations aside for the time being. If there are grounds for invoking force majeure, it must be noted that this sets aside both parties’ obligations, including the principal’s obligation to pay. 

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Contact: Karl Erik Navestad ( / +47 982 94 566)

OIL AND GAS

The corona virus creates major challenges for oil companies, both at macro level and in day-to-day operations. At the macro level, the pandemic affects demand, which lowers the oil price. The daily activities on the shelf can be affected by the following:

Our lawyers have many years of experience advising oil companies and can provide quick and useful advice in a pressured situation.

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Contact: Karl Erik Navestad ( / +47 982 94 566)

PRIVACY AND DATA PROTECTION

In the situation that has arisen, many employers have an increased requirement to procure information about their employees (their health, where they have been traveling, their current whereabouts, etc.). This raises several privacy issues – partly because there are special rules for the processing of health data. 

We advise companies on such issues on an ongoing basis, and we keep abreast of national and international recommendations.

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Contact: Tommy Dahlen ( / +47 994 57 460)

TAX AND VAT LAW

The financial challenges facing Norwegian and international businesses may trigger negotiations and restructuring that could have major tax implications. Arntzen de Besche’s tax department can assist in the early identification of measures that will avoid unpleasant consequences, e.g. loss of deductible positions. For companies with debt financing, this year’s results could also lead to debt interest being reimbursed and affecting the taxable result. If this is a relevant subject, planning should commence as soon as possible.  

Contact: Eyvind Sandvik ( / +47 982 94 518)

 

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Partners and lawyers: The corona virus