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1 Okt. 2025
Insight
Current funding lapse injects timing uncertainty to acquisitions/investments subject to CFIUS jurisdiction
As of midnight October 1, 2025, the US Government has undergone a “lapse in appropriated funding,” which means that a partial “shutdown” of the US Government is now in effect with respect to those Government functions without a continuing funding source. It is unclear how long the funding lapse will continue or how it might be resolved (noting the longest US Government shutdown, 35 days, took place in December 2018 – January 2019 during the first Trump Administration).
Transaction parties with deals currently under review by the Committee on Foreign Investment in the United States (CFIUS), or expected to be filed with CFIUS shortly, should be mindful of the following potential impacts of the shutdown on their transactions:
- CFIUS regulations expressly address a funding lapse, and provide that “[a]ny deadline or time limitation under subpart D [declarations] or E [notices] imposed on the Committee shall be tolled during a lapse in appropriations.” 31 C.F.R. § 800.604. A “Lapse of Appropriations Plan” prepared by the US Treasury Department, which chairs CFIUS, likewise provides that “[a]ll deadlines or time limitations imposed on the Committee on Foreign Investment in the United States (CFIUS) for cases under review by CFIUS, including notices and declarations, will be tolled. Treasury CFIUS activities will continue, as appropriate, as they have a continuing source of funding.”
- This means that deadlines imposed on CFIUS by statute and regulation (for example, requiring CFIUS to, among other things, (i) provide comments on a draft notice within 10 business days of submission if the parties have stipulated to CFIUS jurisdiction, (ii) respond to a declaration within 30 days of acceptance, and (iii) respond to a notice at the conclusion of the 45-day review period or by the end of the second-stage 45-day investigation period) are suspended while the shutdown continues.
- As noted in the US Treasury’s contingency plan, while “[p]rocessing of CFIUS cases” will cease during a funding lapse, “Treasury CFIUS activities will continue,” presumably because those activities are funded in part by filing fees that accompany notices filed with CFIUS. Thus, it’s possible that some work on pending filings may take place, given Treasury’s role as the chair of CFIUS. But CFIUS is an inter-agency committee, and not all of the various Departments and Offices that comprise CFIUS are likely to be operating at complete strength with respect to their CFIUS mandates.
- Deal parties, therefore, should expect that while the shutdown remains in effect, most if not all CFIUS work on current filings will stop, review of new filings will not start, and CFIUS approval of pending transactions likely will not issue.
- The tolling of deadlines only applies to CFIUS, and deadlines on transaction parties will continue.
- This means that parties to a transaction that triggers a mandatory CFIUS filing requirement still must submit a filing to CFIUS at least 30 days before the completion date of the transaction (though we think the general best practice is to file as far in advance of closing as possible).
- In addition, parties to CFIUS mitigation agreements (such as National Security Agreements) must continue to comply with their obligations under those agreements, notwithstanding any shutdown.
- In our view, it remains advisable for deal parties to keep CFIUS informed of any developments in their transactions that have been filed and/or are under review. For example, to the extent that parties intend to close their transactions while the shutdown continues and before any CFIUS approval has issued, either in a voluntary review scenario or after the 30-day filing window for mandatory filings has passed, they should advise their relevant CFIUS contact at Treasury before doing so. It’s not clear how CFIUS may respond in these or other scenarios, but we think deal parties will benefit to the extent they are transparent with CFIUS regarding their intentions and not perceived as taking commercial advantage of the shutdown. Parties also may want to submit new CFIUS filings, notwithstanding the shutdown, if only to hold their place in line when the shutdown ends.
The shutdown injects timing uncertainty into any acquisition or investment for which CFIUS coordination is an obligation or CFIUS approval is a closing condition. Transaction agreements, signed or under negotiation, should be reviewed carefully. Waivers of such obligations and closing conditions may ordinarily be drafted, though they are usually dependent on the non-obliged party's acquiescence. Long stop dates should be revisited to ensure they are sufficient to account for a prolonged US Government shutdown. Transaction parties should understand that any longer shutdown will likely result in a longer ramp up period for CFIUS reviews once full operations resume.
We are monitoring the situation and will update this piece with further developments.
Key contacts
Joseph Falcone
Partner, New York and Washington, DC
James Robinson
Partner, New York
Christopher Boyd
Senior Associate, New York
Daniel Knaap
Associate, New York
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