In an unfolding pandemic, CFIUS remains a vital step in clearing M&A transactions.

Like many federal agencies operating in Washington, DC, the staff administering the CFIUS process at the Treasury Department has been impacted by social distancing safeguards designed to limit the spread of COVID19, creating delays in starting new cases and clearing existing ones.

CFIUS is an inter-agency committee administered by the Treasury Department that reviews foreign investments that may implicate US national security interests.  Some of these filings are mandatory, while others may be voluntary (a voluntary filing and subsequent clearance provides a safe harbor from future CFIUS actions in relation to that investment by the foreign person).  Many investments involving foreign persons may have transactions that are conditioned on CFIUS review and clearance, whether the filing is mandatory or voluntary.  Once parties submit a filing to CFIUS, CFIUS reviews the filing for completeness and, once accepted, starts a statutory 45-day review period.  While CFIUS is under statutory obligations to conduct reviews within a 45-day time frame, if CFIUS needs more time to process cases, it may take various steps to create more time in the process.  For example, CFIUS may extend reviews into a second 45-day investigation period.

Given the current challenges facing the CFIUS staff, parties should anticipate delays associated with the process, however, the extent of any delays will depend on various factors, including the specifics of each case. Companies contemplating or involved in pending M&As during this uncertain time should not rush to waive covenants requiring CFIUS approval or forego the benefits of the safe-harbor protections that a CFIUS clearance would afford.  The potential risks of post-closing CFIUS action down the road remain, even if present delays are burdening the process.   Parties seeking guidance as to the CFIUS risks implicated by a transaction should contemplate obtaining a national security risk assessment from experienced CFIUS counsel to help determine whether a mandatory CFIUS filing is required or whether a voluntary filing to CFIUS should be considered as part of the M&A discussion.