Before postponing, postponing or cancelling an event due to COVID-19, all parties must immediately analyze their rights and obligations under the relevant material agreements. These agreements may include leases, sponsorship agreements, ticketing contracts, return tickets or other related commercial contracts. [8] Pari passu means “in the same rhythm” or (usually) “equal”. Another terminology sometimes used to describe the equitable distribution of payments or proceeds among secured creditors is “proportionate” or “pro rata”. The meaning of these terms may vary depending on whether they are defined in the Agreement and how they are used in their context. Where the agreement in question contains a provision on force majeure, the parties should take into account the following considerations: instead of a mere subordination of a subordinate creditor to a first-ranking creditor, an inter-creditor agreement is generally a more complex agreement between two or more secured creditors, specifying the details of the relationship between them in relation to their co-debtor. A creditor agreement could include provisions that address the following: After analyzing its rights and obligations under the relevant agreements and the common law, an organization must also consider additional legal and practical considerations before deciding to postpone, postpone or cancel an event. Postponements and cancellations of events due to the COVID-19 pandemic raise various business concerns, including whether performance can be excused under a force majeure provision or common law doctrine, such as. The impossibility or frustration of the goal; the extent of each party`s insurance coverage; and whether the Promoter must reimburse ticket purchasers. Below is a summary of the key principles and possible considerations for assessing these issues. As for “what`s in a name,” it turns out it`s a lot. Although there are no firm rules on the conditions that a particular agreement that deals with priorities contains, the name of the agreement can give a fairly good indication of the nature of the agreement and the provisions it contains.
Don`t forget to read the fine print. If an agreement does not contain a provision on force majeure, but the parties are considering postponement or cancellation, doctrines of impossibility or frustration of the objective may allow the parties to do so without violating the agreement. A contract between creditors generally provides for mutual subordination of security rights and distribution of payments among secured creditors. It may also address issues that are not necessarily related to priority, such as. B, enforcement of rights and remedies and access to safeguards. First, the parties must determine whether the agreements contain provisions on force majeure or an excuse for performance. If so, it is important to see which situations are specifically covered by the clauses. Many courts, including new York courts, interpret force majeure clauses narrowly, so an event can only constitute a force majeure event if the clause expressly includes that event. See e.B.
Kel Kim Corp.c. Cent. Mkts., Inc., 519 N.E.2d 295, 296-97 (N.Y. 1987). While New York courts typically require inability to perform to excuse a party`s non-performance, the force majeure clause of a contract may allow a party to seek a defense against force majeure, even if performance is not impossible – for example. B, a force majeure clause may rather provide: that such a service may be excused if it is simply hindered or directly affected by the force majeure event. [1] As in a deferral agreement, as shown below. An agreement on these terms constitutes total or profound subordination of one secured creditor to another.[7] A subordination agreement may limit the scope of subordination, e.B exist to a limited amount in dollars, for a certain period of time, or for other terms, and may include some of the more complex provisions of an intercredit provider agreement, as explained below. However, the typical subordination agreement is a unilateral subordination by a subordinate creditor to a senior creditor. Proponents should keep in mind that even in the absence of a legal obligation to reimburse, an organization`s failure to provide a repayment, credit, or substitution event of comparable value may be challenged as a violation of a state`s consumer protection law or as a breach of a contract under the common law.
In fact, an alleged class action lawsuit has been filed in California against Do Lab, Inc. (DLI), the organizers of the annual Lightning in a Bottle music festival, which has been postponed (and possibly cancelled) due to the COVID-19 outbreak. The complaint alleges that DLI`s refusal to provide a refund constitutes an unscrupulous contractual clause in violation of California`s Consumer Legal Remedies Act. The plaintiffs also allege that DLI engaged in deceptive marketing practices by stating in the event terms and conditions that the buyers were not entitled to a refund. A letter of no interest (sometimes called an estoppel letter) or similar agreement is not necessarily an agreement that affects the primacy of payments or guarantees, although it concerns warranty rights.[9] In a prohibition of interest, a secured creditor confirms to another that it does not have a security right in certain security rights or that its security right is limited to certain security rights. This differs from a subordination agreement in that the creditor submitting the letter rejects or restricts any interest in the security right, rather than maintaining a subordinate security right in the security right. However, for the secured creditor that receives the interest ban, the effect is the same as for a subordination agreement. The beneficiary secured creditor may invoke the prohibition of interest to assert its primacy over the security right over the secured creditor granting the letter. The coronavirus/COVID-19 outbreak has prompted many businesses and event organizers to postpone, postpone or even cancel public events.
Due to regulations and advice from governments and public health agencies that prohibit large gatherings of people, various local, national and international events, including sporting events, concerts and conferences, will not take place as planned, if at all. A subordination agreement (sometimes called a priority agreement or priority agreement) is issued by one creditor in favour of another and generally deals with the creditor`s subordination of both the security rights governed by the law and the creditor`s claim to payment. Under a subordination agreement, the subordinate creditor guarantees: Organizers and other businesses involved in events that have already been or may be affected by COVID-19 should consider the following checklist before deciding to postpone, postpone or cancel an event: The terms of agreements that address priorities and issues they address; are limited only by the demands of the parties and the imagination of creditors and their lawyer. Although this article has treated each type of agreement as distinct and different, some or all of the elements of each type of agreement can be combined into a single agreement. .