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More than a year after Rocking M Media filed for chapter 11 protection, the company told a bankruptcy court that it is working on a new plan for how it will emerge from the process, InsideRadio reported. The move came as several creditors and the U.S. Trustee continue to object to the outline provided by the company. The Federal Communications Commission (FCC) is also asking the court not to wipe away the agency’s pending claim against Rocking M. The FCC has been investigating the broadcaster for several alleged violations of Equal Employment Opportunity regulations. The FCC has asked that its claim of up to $990,936 be preserved. The investigation currently covers 18 potential violations, which carry a maximum statutory forfeiture of $55,052 per violation. Rocking M has asked the court to reject the FCC claim, or order it to be amended. The FCC said that request is “premature” and argues that it should not be forced to turn over documents about its investigation. Rocking M Media sought chapter 11 protection in March 2022 when it told court that it had nearly $8.5 million in outstanding debts and assets worth less than $1 million. The 22-station Kansas group held an auction last summer to sell a dozen stations in order to raise cash, which brought in $1,988,674. However, the auction tally fell short of the money owed to debtholders, leaving open the possibility that Rocking M may be forced to sell other radio assets as part of the bankruptcy process.

Yellow Corp. has failed to make its required pension contributions for June and is planning to withhold payments for July, FreightWaves reported. The pension funds, pension accruals and health care coverage for workers will suspend on Sunday, according to a statement by the Teamsters. The Teamsters union has threatened to strike by Monday if this is not resolved and the pension contributions remain in default. The company owes $50 million and currently has in excess of $100 million in cash reserves. If a strike comes to pass, this would likely be the end for the storied less-than-truckload carrier. While there is a lot of noise around the Yellow story, one thing is clear: Management is aware of the risks of not paying into the pension fund. They would have only missed a pension payment out of dire necessity, not convenience. After all, this is not an Elon Musk-style default — “I am not going to pay this because I don’t want to” — but rather a decision that is borne out of a lack of sufficient funds to cover the payments. Yellow’s management likely knew that not paying the funds would force the Teamsters’ hands. Perhaps they were hoping for a last-minute government bailout and decided that not paying the pension payment would allow for a few more weeks of liquidity until that bailout came. On at 2 p.m. EDT Thursday, FreightWaves will be hosting a special webinar to discuss what a Yellow shutdown likely means for the freight market and how shippers and carriers should prepare.

When Tom Ambro got a call from a friend in 1990 who mentioned “eleven-ten,” he thought it was a reference to the time rather than the section of the Bankruptcy Code that covers airplanes, Bloomberg Law reported. Ambro, then a transactional lawyer at Richards Layton & Finger in Wilmington, Del., agreed to represent aircraft financiers in Continental Airlines’ second bankruptcy. That case, which he later argued before the U.S. Court of Appeals for the Third Circuit, altered the trajectory of Ambro’s career, pivoting his focus to bankruptcy. He ultimately returned to the Third Circuit as a judge, where he is perhaps the foremost authority on bankruptcy law sitting on any federal appeals court. “He’s probably forgotten more bankruptcy than many circuit judges will hope to learn,” said Prof. Bruce Markell of Northwestern University. Ambro is still making a mark even after recently taking senior status, penning the decision that struck down a Johnson & Johnson subsidiary’s bankruptcy earlier this year. He may not have semi-retired at all if not for the election of Joe Biden, who had shepherded Ambro’s nomination through the Senate 20 years ago. By taking senior status, Ambro handed his friend a vacancy. “I think I owed it to my friend, who’s the president,” Ambro said during an interview. The decision to strike down the J&J subsidiary’s bankruptcy was a serious shakeup to a controversial legal strategy some corporations are using to resolve mass liability through bankruptcy. The subsidiary could not receive bankruptcy benefits because it was not in financial distress, Ambro wrote. “That opinion begins to curb some of the cleverness that parties are taking,” said Hon. Barbara Houser (ret.). She said she admired Ambro for walking a “very careful line,” although she said some wanted him to come down harder against the J&J maneuver. Ambro declined to comment on J&J because he may have to weigh in on the case again. J&J is back in bankruptcy court making a second, similar attempt at the maneuver. A judge is considering if this attempt should be dismissed, which could result in another appeal to the Third Circuit.

Economists are dialing back recession risks, The Wall Street Journal reported. Easing inflation, a still-strong labor market and economic resilience led business and academic economists polled by The Wall Street Journal to lower the probability of a recession in the next 12 months to 54% from 61% in the prior two surveys. While that probability is still high by historical comparison, it represents the largest month-over-month percentage-point drop since August 2020, as the economy was recovering from a short but sharp recession induced by the COVID-19 pandemic. It reflects the fact that the economy has kept growing even as the Federal Reserve has raised interest rates and inflation declined. In the latest survey, economists expected gross domestic product to have grown at a 1.5% annual rate in the second quarter, a sharp uptick from 0.2% in the previous survey. They still expect GDP to eventually contract, but later, and by less, than previously. They expect the economy to grow 0.6% in the third quarter, in contrast to the 0.3% contraction expected in the prior survey, followed by a 0.1% contraction in the fourth. Forecasters said GDP would increase 1% in 2023, measured from the fourth quarter of a year earlier, double the previous forecast of 0.5%. Nearly 60% of economists said their main reason for optimism about the economic outlook is their expectation that inflation will continue to slow. The Labor Department’s consumer-price index climbed 3% in June from a year earlier, sharply lower than the peak of 9.1% in June 2022 and the slowest in more than two years. The Fed’s preferred inflation measure has fallen from 5.4% in March 2022 to 4.6% in May. Economists expect it to reach 3.7% by the fourth quarter of this year, though that is still well above the Fed’s 2% target.

Following the sharp rise in central banks interest rates, a number of voices have warned that corporate defaults could increase significantly and even triple, because of the higher carrying cost of debt burdens in markets that are slowing down, Morningstar reported. However, these fears have not materialized — yet. The U.S. high yield corporate credit spread (difference in yield between high yield corporate bonds and government bonds) presently stands at only just over 4%. At the end of 2022, the trailing default rate of non-investment-grade rated companies was at a historically low 1.7%, according to S&P Global Ratings. In Q1 2023, two companies received a rating upgrade (“rising stars”) and none were downgraded (“fallen angels”). It was the same story all through 2022 and 2021, when 60 stars rose and only 22 angels fell, a trend contrary to the norm. Similarly encouraging numbers hold for bankruptcies. At the end of Q1 2023, total bankruptcy filings in the U.S. amounted to 14,467, reports Yanick Desnoyers, senior vice president and chief economist at Addenda Capital. “Pre-COVID, they numbered 22,780 over a same one-year period, and in 2009, during the GFC, 61,000,” he recalls. It is the same situation in Canada: for the year ending in April 2023, the country registered 2,855 bankruptcies, compared to 2,746 pre-COVID and 6,100 in 2009. Desnoyers is surprised to discover that net interest payments in the Federal Reserve flow of funds data are only U.S.$225 billion while they were just under U.S. $300 billion in early 2021. “That fall of U.S. $75 billion means that many companies have taken advantage of the lower rates that prevailed in 2021 and 2022 to emit a lot of debt and lock in low rates,” he says. That causes the debt-to-equity ratio to stand at 25% in the US, while it held at 27% pre-COVID, and towered at 60% in 2009.