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Post-pandemic Construction Disputes: What to Expect from Real-time Adjudication

Increased litigation after the pandemic is likely. Here’s how construction companies can prepare. Read


Where There’s Money, There’s Enforcement! Be Prepared for Government Investigations in the Wake of COVID-19

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8 Ways to Manage Your Mental Health as In-house Counsel

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In Brief

Today's Top Story

The Biggest US Mall Owner, Simon Property, Sues Gap Over Skipped Rent Payments

CNBC News (4 June, Thomas) is reporting that Simon Property Group, the largest mall owner in the United States, is suing one of its biggest tenants, Gap. Simon alleges that the apparel retailer failed to pay more than US$65.9 million in rent and other charges due during the COVID-19 outbreak. The battle in Delaware state court highlights the mounting tension between retail landlords and their tenants, many of which stopped paying rent after the crisis forced them to shut stores. Gap announced in late April that it ceased paying rent on its temporarily shuttered stores in North America, totaling nearly US$115 million in monthly expenses. Simon malls currently boast 412 Gap stores, including Banana Republic and Old Navy, making Gap Simon's biggest in-line tenant in terms of rent.

From "The Biggest US Mall Owner, Simon Property, Sues Gap Over Skipped Rent Payments"
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Regulatory Developments

Biggest Beneficiary of UK Virus Aid Plan Is German Chemicals

Germany's chemicals firm BASF was the biggest recipient of emergency funding from a £16.2 billion Bank of England program designed to help the biggest companies in the United Kingdom weather the coronavirus pandemic. The Bank of England confirmed in a statement Thursday that BASF received £1 billion, the maximum allowed under the scheme. Bloomberg (4 June, Goodman, Noel) reports other big borrowers included Bayer and a unit of the US oil services company Baker Hughes. The Bank of England program was intended to help major companies making what the government called a "material contribution" to the United Kingdom. The scheme ended up helping out more companies from outside the United Kingdom than domestic firms. That may stir controversy over whether the United Kingdom imposed sufficient restrictions on companies seeking state aid. A BASF spokesperson said the company employs 834 people in the United Kingdom.

From "Biggest Beneficiary of UK Virus Aid Plan Is German Chemicals"
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Governance

Corporate Activists Flex Muscles Again With More Campaigns in May: Lazard Data

According to data from Lazard, shareholder activists launched 16 new campaigns in May, including five in Japan. That is double the number in April and pushes the total to 83 for the first five months of the year, notes Reuters (3 June, Herbst-Bayliss). However, Lazard points out the pace is off monthly averages seen prior to the novel coronavirus outbreak. Jim Rossman, head of shareholder advisory at Lazard, said activists are putting "money to work to take advantage of attractive valuations while they last." He expects activity to remain subdued in the near term but noted that a "strong resurgence in activism" is possible in the second half of the year. In May, Elliott Management joined forces with mutual funds Fidelity, MFS, and Capital Group to back energy delivery company CenterPoint Energy with US$1.4 billion. Meanwhile, Oasis Management called for share buybacks and the election of new board members at Japan's Mitsubishi Logistics. Further, Starboard Value won eight board seats at GCP Applied Technologies, leading other hedge funds in winning seats this year with a total of 14.

From "Corporate Activists Flex Muscles Again With More Campaigns in May: Lazard Data"
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Board/Management Relations

Bankruptcy Is a Jackpot for CEOs Helming Failed Oil Companies

Even as Whiting Petroleum Corp., Chesapeake Energy Corp., and Diamond Offshore Drilling navigate the bankruptcy process, 35 executives across the three companies stand to benefit from US$50 million in payouts. Similarly, California Resources Corp. has guaranteed its executives' 2020 bonuses even though the company warned investors last month it has "substantial doubt" that it can stay afloat. Corporate directors have said the multimillion-dollar paydays are needed to prevent the executives from jumping ship and retain experienced management teams with deep knowledge of the company's assets. But observers have criticized the companies for shelling out big bucks to executives while tens of thousands of employees are out of work, reports Bloomberg (4 June, Crowley, Adams-Heard, Wethe). Evercore analyst Doug Terreson said a significant disconnect between pay and performance has long been a hallmark of the energy sector. Terreson's research found that the leaders of 15 large explorers raked in more than US$2 billion in aggregate compensation over the past decade despite a 15 percent losing streak on a total return basis.

From "Bankruptcy Is a Jackpot for CEOs Helming Failed Oil Companies"
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Crawford & Company Elevates New General Counsel

Crawford & Company has promoted Tami Stevenson to the position of senior vice president and global general counsel, according to Insurance Business America (4 June, Smith). Stevenson was appointed as general counsel after former general counsel Joseph Blanco was elevated to the role of president, and she will report to Blanco. Stevenson will oversee the company's legal department and help the Crawford board maintain best practices in governance policies and procedures. Stevenson has been with Crawford for 23 years.

From "Crawford & Company Elevates New General Counsel"
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Cybersecurity

Hackers Steal Secrets from US Nuclear Missile Contractor

Sky News (3 June, Martin) is reporting that hackers broke into the computer network of the US military contractor Westech International. The contractor reportedly provides critical support for the US Minuteman III nuclear deterrent, meaning the hack has potential national security implications. The hackers reportedly encrypted Westech's machines with Maze ransomware and began to leak documents online in an attempt to pressure the company into paying a ransom. It is unclear whether the documents stolen by the hackers include classified military secrets, but files that have already been leaked online include payroll information and emails, suggesting the hackers had access to privileged data. Westech is involved with the Minuteman III deterrent as a subcontractor for Northrup Grumman, providing engineering and maintenance support for the Minuteman III intercontinental ballistic missiles. There are reportedly concerns that the hackers may look to profit off of the sensitive stolen data by selling it to a hostile state, even if Westech does pay the ransom. Emsisoft researcher Brett Callow warned that the "high market value" of stolen data may spur the cybercriminals to "sell it to other governments or trade it with other criminal enterprises."

From "Hackers Steal Secrets from US Nuclear Missile Contractor"
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Finance

HSBC and Standard Chartered Publicly Back China's Hong Kong Security Law

The UK banks HSBC and Standard Chartered have publicly supported the national security law China is imposing on Hong Kong. The banks' approval comes after London has openly opposed the legislation, reports the Financial Times (3 June, Riordan). Swire and Jardine Matheson, two UK colonial-era trading houses, previously voiced their support for the national security law. HSBC posted on the Chinese social media platform WeChat that the bank's CEO of Asian businesses, Peter Wong, had signed a petition in support of the legislation. The post also expressed HSBC's continued support for the "one country, two systems" model in Hong Kong. HSBC confirmed the content of the post but declined to comment further. Standard Chartered said in a statement that it believes the law will "help maintain the long-term economic and social stability of Hong Kong." The banks' decision to back the national security law could prove controversial in the United Kingdom and among pro-democracy figures in Hong Kong.

From "HSBC and Standard Chartered Publicly Back China's Hong Kong Security Law"
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Energy

Poland May Fine Gazprom Over Nord Stream 2 Pipeline Case

Poland's competition watchdog, UOKiK, may fine the Russian gas producer Gazprom up to €50 million over the company's lack of cooperation in anti-monopoly proceedings, UOKiK said Wednesday. The anti-monopoly proceedings are connected to the Nord Stream 2 gas pipeline project. Reuters (3 June) notes that UOKiK in 2018 charged six companies, including one owned by Gazprom, with financing construction of the pipeline without a legally required permit. In early 2020, Gazprom failed to provide documents relating to the case, UOKiK said. “Gazprom cannot operate above the law and, for that reason, I have initiated proceedings against the company to impose a fine for failure to provide information during the pending investigation,” UOKiK President Tomasz Chrostny said in a statement. Poland perceives the Nord Stream 2 pipeline as a threat to Europe's energy security. The pipeline would double Russia’s gas export capacity via the Baltic Sea.

From "Poland May Fine Gazprom Over Nord Stream 2 Pipeline Case"
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Mining

Australia's Iron Ore Miners Exploit Supply Gap as COVID-19 Hobbles Rivals

Australian iron ore producers are taking advantage of a supply gap as the coronavirus crisis prevents rivals from capitalizing on China's strong demand for the key ingredient of steel. The Financial Times (2 June, Smyth, Hume) reports that BHP, Rio Tinto, and Fortescue Metals Group (FMG) have continued to operate amid the COVID-19 pandemic, shipping more iron ore than ever before as rivals in Brazil and South Africa contend with severe disruptions. The three Australian firms said they were able to avoid crises thanks to innovative technology, an adaptive workforce, and government policies out of Canberra. Elizabeth Gaines, the CEO of FMG, said the company has found itself in a "privileged position" amid "market concerns on the security of supply from other iron ore producing countries." Steel production in China has steadily increased as Beijing steers the country out of coronavirus lockdowns, but iron ore exports from Brazil and South Africa have slumped 12 and nine percent, respectively, leaving the Australian companies to exploit the supply gap.

From "Australia's Iron Ore Miners Exploit Supply Gap as COVID-19 Hobbles Rivals"
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Security

Security Guards Flooding New York After Looting Binge

Demand for security guards is skyrocketing in New York City as demonstrations over the death of George Floyd have also attracted looters and vandals, reports the Wall Street Journal (4 June, Barbanel). Armed and unarmed guards are highly visible along the city's Fifth Avenue shopping corridor and other popular retail hotspots. They also have posted up in front of offices and residential buildings. Former New York police detective Beau Dietl said his firm has fortified its patrols for existing customers and taken on new beats for another 52 buildings this week alone. Demand is so great, he says, that needs to hire on more personnel in order to keep up. While some buildings are resisting the trend, taking no steps to beef up their security, others insist that the presence of guards — even unarmed — is a worthwhile deterrent against vandals.

From "Security Guards Flooding New York After Looting Binge"
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Entertainment

AMC Theatres Has 'Substantial Doubt' It Can Remain in Business

CNN (3 June, Pallotta) reports that AMC Theatres, the world's largest movie theater chain, has "substantial doubt" it can remain in operation after shuttering locations around the world during the COVID-19 outbreak. The theater chain expects to have lost as much as US$2.4 billion in the first three months of 2020. In addition, the company said that its revenue dipped to US$941.5 million, down nearly 22 percent from US$1.2 billion in the first quarter of 2019. In the second quarter, AMC's situation has gotten substantially worse. "We are generating effectively no revenue," the company said in a regulatory filing Wednesday. AMC is continuing to monitor the "potential lifting of various government operating restrictions" nationwide. But even if all restrictions are lifted soon, the chain has serious challenges ahead.

From "AMC Theatres Has 'Substantial Doubt' It Can Remain in Business"
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Corporate Social Responsibility

Companies Push for More Access to Mail-in Voting

More than 100 companies have signed an initiative calling for additional federal funding for expanded mail-in voting. Corporations ranging from UniLever to Warby Parker backed the push to expand mail-in voting to all registered voters and extend early, in-person voting by two weeks, reports the Wall Street Journal (3 June, Cutter). Rose Marcario, chief executive of outdoor apparel company Patagonia and one of the organizers of the effort, said mail-in voting will protect workers from exposure to COVID-19 in crowded polling places on Election Day. While mail-in voting advocates have touted reports finding absentee ballot abuse to be exceedingly rare, President Trump has criticized mail-in ballots in recent weeks, suggesting they are an avenue for widespread voting fraud. Congress in March approved US$400 million in election-assistance grants as part of a coronavirus stimulus bill, but House Democrats are seeking up to US$3.6 billion in additional funds. Sarah Bonk, founder and CEO of Business for America, said companies increasingly believe that bolstering civic engagement is part of their corporate social responsibilities.

From "Companies Push for More Access to Mail-in Voting"
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