Governor Doug Ducey Announces Extension of Arizona’s Stay-at-Home Order: What Does this Mean for Arizona Businesses?

Coronavirus stay at home order blogOn March 31, 2020, Governor Doug Ducey issued a stay-at-home order to combat the spread of COVID-19. The order urges Arizonans to stay at home unless they need to do essential activities. Businesses such as salons, gyms, and movie theaters were declared non-essential, resulting in most of those companies’ employees being laid off or furloughed. Under the order, restaurants can only serve food by take out or drive through. Essential and non-essential businesses alike were urged to provide their employees with the opportunity for remote work whenever possible. The order was issued to expire on April 30, 2020. Today, Ducey announced that the stay-at-home order will extend through May 15, 2020 with modifications. The Travel Restriction Order was extended until May 15, 2020.

Governor Ducey has previously stated that Arizona will follow the White House’s guidelines of reopening the state through phases. In Phase 1, elective surgeries can recommence. Gathering places such as restaurants, churches, and sporting arenas can reopen if they adhere by social distancing rules. Gyms will need to abide by these rules along with strict sanitation guidelines. In Phase 2, schools can reopen, but school will be out for the summer anyway. Large venues will have their social distancing guidelines loosened, but gym protocols will remain just as strict in Phase 2. In Phase 3, essentially everything reopens under “limited physical distancing protocols,” and gyms can resume “standard” sanitation procedures.

Modifications under the extended order are a voluntary partial retail reopening on May 4th, with expansion on Friday, May 8th. Governor Ducey has a goal of reopening restaurants in May, but stated that it won’t happen before May 12th. Restaurants workers will have to wear masks and will ask customers their preference in method of food service.

When making his decision, Ducey took input from business owners on whether they want to reopen. Some have concerns about sanitary precautions, reluctant customers and employees, and supply issues, but the palm trees in the background of viral quarantine protest videos are easily recognizable. Over 250,000 Arizonans have filed for unemployment since the onset of the coronavirus pandemic.

Many Arizona businesses have been utilizing the benefits of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) such as payroll protection loans. Some of these benefits are conditional, like partial loan forgiveness if the company continues to pay staff without furloughs and layoffs. Now that Governor Ducey has announced his decision, business owners have to decide whether or not to continue utilizing these benefits.

Recovering from the pandemic’s economic impact will take months, if not years, for many companies. For those businesses that don’t financially survive the pandemic, bankruptcy is an option. In a Chapter 11, a company can remain in business and maintain control of day-to-day operations. Their debt will be organized, and the bankruptcy court will have to approve big business decisions. Smaller companies more often opt for a Chapter 7. In a Chapter 7 bankruptcy, the debt isn’t reorganized but is simply discharged. The business will be forced to close, but its debts will no longer need to be repaid.