As the coronavirus (COVID-19) outbreak continues to unfold, secretary of state and equivalent offices in various states are starting to limit their service offerings in order to safeguard the health of staff and the public. Certain expedited filing options may no longer be honored, and submitting filings and receiving confirmation of acceptance of those filings may take longer than usual. Such delays, if not anticipated and planned for, could impact the closing of transactions where the timing and approval of state filings are essential, such as mergers, bank financings, and sales of securities. Companies contemplating transactions during this period should therefore look to their service providers and specific states for guidance and evaluate issues that these delays may cause.
In Delaware, over-the-counter services have been limited; however, the full range of the state’s filing services generally continue to be available electronically, including expedited options for filing and requesting various documents.
In a number of states, including Illinois, Maryland, and Vermont, secretary of state or equivalent offices have been closed to in-person filings or otherwise are subject to remote work only and are only accepting filings sent in by mail or submitted electronically. Offices in other states appear to remain open, for now, although over-the-counter services in many states have been suspended, and filers must drop off their documents in onsite drop-boxes or submit them by mail or electronically.
In states where over-the-counter services have been suspended, expedited filing options may no longer be available. In Maryland, for example, charter amendments and articles of merger are usually filed over the counter, as the state does not allow electronic filing of these documents. With over-the-counter services now unavailable, filings generally must be submitted by mail, and their processing may take several weeks. The Maryland SDAT has indicated that articles of merger and similar filings will be afforded an effective date of the date received by mail, but receipt of acceptance will take time. In the context of a merger where a specific effective date or time is critical, significant advanced planning may be necessary, and even that may not prove enough to allow parties to feel comfortable releasing funds from escrow or taking other closing actions. In addition, in many of these states, pre-clearance activities have ceased or significantly slowed.
It is not yet clear how quickly states will be able to process filings submitted electronically, by mail, or through drop-box options. In Connecticut, Georgia, Maine, and Nevada, expedited service options appear to still be available, although with some delays. In Minnesota, New Mexico, and Pennsylvania, no expedited services are available at all.
As states continue to grapple with the spread of the COVID-19 outbreak, it is likely that some processing times will increase due to secretary of state and equivalent offices in various states becoming overwhelmed with requests, coupled with pressures in staffing.
State filings that may be impacted by delays include, but are not limited to, the following:
States have not indicated when they will be returning to normal service, and it is possible that many of the current filing limitations may expand as states continue to contend with the effects of the COVID-19 outbreak. Further, some of the current guidance on timing from states may change as they implement the new filing restrictions. It is important, therefore, that companies plan ahead and continuously evaluate the impact that potential delays in filings could have on contemplated transactions.
Morrison & Foerster Associate Fred Muna assisted in the preparation of this client alert.