March 27, 2020 - Barack Ferrazzano Client Alert

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Client Alert: Unique COVID-19 Challenges for Motor Vehicle Manufacturers & Distributors

Motor vehicle manufacturers and distributors are facing significant challenges due to the COVID-19 pandemic. Some of these challenges are likely familiar ones, resurfacing issues OEMs last confronted during the 2008 financial crisis. But there is no question that COVID-19 presents new and unique challenges as well — novel issues of significant consequence for in-house legal counsel and their clients.

Barack Ferrazzano’s Motor Vehicle Group, a nationwide practice comprised of 25+ attorneys, has deep experience assisting OEMs through dealer network crises caused by sudden, sharp economic downturns. We think outside-the-box with our clients to come up with creative but measured strategies for OEMs to protect their legal rights and business interests while managing the risks associated with their statutory and contractual obligations. Barack Ferrazzano’s experience includes:

• Crafting non-discriminatory dealer assistance policies and programs designed to provide financial support to ensure ongoing dealer operations on a temporary basis.
• Representing OEMs and their affiliated finance companies with respect to financially distressed dealerships, dealership bankruptcies, and related termination proceedings.
• Crafting policies and one-off agreements to acknowledge, document, and forbear enforcement of dealer performance and operational deficiencies during periods of economic distress.
• Managing inventory and allocation issues, including development of allocation strategies to address limited supply of makes and/or models, or depressed demand from dealers for existing available supply.
• Working with OEM finance companies to address dealer defaults, floorplan holds, and instances when dealers are out-of-trust.
• Creating and managing network-wide voluntary termination programs, litigating large-scale but expedited involuntary termination programs, and evaluating OEM repurchase obligations in the context of a financial crisis.
• Reviewing and managing OEM evaluations of complex single-point and multi-point buy-sell transactions and associated OEM rights of first refusal, as well as high-leverage litigation regarding such transactions.

In addition, our Motor Vehicle Group attorneys regularly leverage Barack Ferrazzano's deep bench in other practice areas — such as commercial real estate, financial institutions, corporate transactions, and employment — to fashion business and legal solutions uniquely tailored to the needs of our OEM clients.

We Can Help You

As unique and challenging issues arise in the coming weeks and months, we stand ready to assist you and your clients in meeting the needs of this unprecedented moment.

COVID-19 Resources

We recommend you evaluate the following pandemic-related business and legal considerations that we have been discussing:

• Barack Ferrazzano's COVID-19 Resource Center