CFIUS Might Plug Away During Government Shutdown, Law Firm Says
A partial U.S. government shutdown Oct. 1 likely would slow but not stop the work of the Committee on Foreign Investment in the U.S., Freshfields said in a client alert Sept. 30.
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Unlike in past shutdowns, most if not all CFIUS staff may be able to continue working this time due to changes made in 2018 to the way the agency is funded, the law firm said. This would allow "some progress to be made on transactions under review." But CFIUS is not expected to approve any transactions until the shutdown ends, which could lead to significant delays if the government funding impasse doesn’t end soon.
“The lengthier the shutdown, the longer [transaction] parties should plan for delays after the government reopens,” Freshfields wrote. “CFIUS may receive a substantial number of filings during the shutdown, and it is likely to stagger the acceptance of new filings on a first-come-first-served basis.”
While a shutdown would pause statutory review deadlines that CFIUS must follow, it wouldn't do so for transaction parties, which would still have to consider whether a filing is due 30 days before closing, the post says. While parties could theoretically close their transactions once the 30-day requirement is met, doing so “may present risks should CFIUS determine that the filing was incomplete or CFIUS identifies national security risks that require post-closing remedies,” the post says.
Freshfields said CFIUS would likely continue pursuing enforcement actions and monitoring highly sensitive transactions during a shutdown. Parties may still be required to make submissions required by national security agreements.