Legal Update on Section 4003 of the CARES Act – Liquidity for Eligible Businesses, States, and Municipalities

In a development with potential relevance for leveraged borrowers and, by extension, the CLO market, the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, was signed into law by President Trump on March 27, 2020. The CARES Act provides for liquidity support for both large and mid-size businesses that, unlike the Primary Market Corporate Credit Facility and the Secondary Market Corporate Credit Facility, is not limited to investment grade businesses or investment grade debt.  In this Legal Update, we make a few initial observations regarding eligibility, terms, requirements and conditions for the programs and facilities contemplated by Section 4003 of the CARES Act, followed by a detailed summary of Sections 4003 and 4004 of the CARES Act.

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