Below are important updates covering COVID-19 related information as it pertains to the food and beverage industry.

Economic Relief
As of April 3, 2020, no substantial economic relief has been provided to the restaurant and hospitality industry. On March 28, there was significant traction on Senator Rubio’s Keeping Workers Paid and Employed Act. While the bill has since been dissolved, there is potential for a relief bill in the near future. In the interim, it is imperative that you get involved–contact your representatives and request that they immediately support such legislation in the U.S. House. 

Rent Relief
There are many discussions occurring regarding a tenant’s obligation to pay rent during the shutdown and shelter-in-place. Rather than entering a contentious dispute with your landlord as to whether or not a force majeure clause in a particular lease excuses the tenant’s obligation to pay rent (note: force majeure clauses typically apply to an event which “prevents performance,” whereas a shutdown does not necessarily prevent the payment of rent), reaching out to your landlord and starting a dialogue about the status of your business and cash-flow may be a feasible option the interim. Some rent relief letters and requests to landlords may return a favorable outcome ranging from rent deferral to outright rent forgiveness.

Business Interruption Insurance
At the end of March 2020, a topic of discussion was focused on whether business interruption insurance will deny claims for coverage of losses related to COVID-19. While it is true that most business interruption insurance policies specifically exclude coverage for losses related to viral contamination or pandemics, you should not assume that your claim for coverage will be denied.

First, not all policies exclude viral pandemics. Further, these are unprecedented times and we are in uncharted waters—there are virtually no prior business interruption insurance cases which involve total or partial closing of restaurants due to a pandemic. The question as to whether or not coverage applies will likely be decided later by legislatures and courts in each state with varying decisions.

Additionally, most policies require that the insured give prompt notice to the insurer and, to the extent such “prompt” notice is not given, coverage may be subsequently denied if notice is given too late. There is virtually no downside in making a claim for business interruption insurance with the potential upside that (i) your claim gets approved or (ii) you have preserved your rights to potentially litigate coverage later. Please review a white paper that Taft’s Insurance Coverage and Recovery attorneys prepared on pursuing insurance coverage to cover financial losses from the COVID-19 pandemic here.

Illinois Liquor Licensing
If you maintain an Illinois liquor license, it is recommended that you monitor the Illinois Liquor Control Commission (ILCC)’s website for COVID-19 related updates.

At the end of March 2020, the ILCC also temporarily authorized all retail licensees to conduct to-go sales and deliveries. You can view the guidance here.

Additionally, there are many inquiries circulating regarding liquor returns and the ILCC’s delinquency list. Currently, only beer (sold on, or before, today) is returnable in accordance with the provisions of ILCC’s guidance, though distributors are not required to accept such returns.

At this time, the delinquency list will be maintained such that retail licensees who have not paid a distributor in full, within 30 days after delivery, will be placed on the delinquency list unless such retail licensee timely files a bona fide dispute with the ILCC regarding the alleged outstanding balance. It remains that wine and spirits distributors are not permitted to sell wine and spirits to any retailer while such retailer remains on the delinquency list.

View the following links for additional guidance:

• Latest guidance from ILCC.
• Compliance directive from the ILCC.
• ILCC FAQ.

For further information, contact Patrick Wartan or a member of Taft’s Food and Beverage group.

Please visit our COVID-19 Toolkit for all of Taft’s updates on the coronavirus.