%1

A bankruptcy judge denied a request by creditors of Hale & Hearty Soups LLC to appoint an interim trustee to oversee the property of the now-defunct lunch purveyor in New York City, WSJ Pro Bankruptcy reported. Judge James Garrity of the U.S. Bankruptcy Court in Manhattan on Thursday rejected the request from Hale & Hearty’s landlord APF Properties LLC and vendors Baldor Specialty Foods Inc. and Westside Foods Inc., saying that the creditors didn’t provide any evidence to support their allegations against the company that they said would warrant a trustee. “This is an extraordinary remedy, and you have a burden to demonstrate that there is a cause for the requested relief,” Judge Garrity said. “And most respectfully, you haven’t done it, because there is no evidence to support what you contended in your motion.” Judge Garrity said that he would reconsider an appointment of a trustee if the creditors provide sufficient evidence. The company’s owner, Pinchas Shapiro, through his lawyer, said that he would work with any fiduciary appointed by the court to help stakeholders recover “as much value as possible.” The COVID-19 pandemic has emptied out Manhattan’s business districts, and many restaurants, including lunch places, didn’t survive. Before the pandemic, the soup-and-sandwich chain had more than 20 stores, mostly in Manhattan, but all were closed in July, according to a court filing. The company has been placed under chapter 7 since last week when the creditors filed an involuntary bankruptcy petition in an attempt to collect about $816,780 that they said they are owed.

Kabbage Inc., a small-business credit platform that sold most of its assets to American Express Co. in 2020, filed for bankruptcy facing federal investigations and private lawsuits for its alleged mishandling of thousands of Paycheck Protection Program loans, WSJ Pro Bankruptcy reported. The Federal Reserve Bank of San Francisco declared Kabbage in default last week on a federal liquidity facility for PPP lenders, according to bankruptcy papers filed by the company on Tuesday. Its chapter 11 filing on Monday covers the remnants of Kabbage’s business that were left behind after the October 2020 sale of most of its assets — but not its existing PPP loan book — to Amex. Kabbage, which does business as KServicing, isn’t affiliated with Amex and has continued to service PPP loans that it originated for itself and its partner banks. It has been winding down its operations, but ran out of time and money as federal prosecutors, congressional investigators and other authorities probe its PPP lending and loan-servicing practices. The Atlanta-based company’s restructuring adviser, Deborah Rieger-Paganis, said in a sworn declaration Tuesday that Kabbage is embroiled in costly investigations and litigation despite its adherence to Small Business Administration guidance about the popular relief program. The Justice Department has been cracking down for years on alleged fraud in COVID-19 relief programs, especially the PPP, which issued forgivable, government-guaranteed business loans to keep checks flowing to American workers during the COVID-19 pandemic. U.S. attorneys in Boston and Houston have been investigating whether Kabbage improperly approved fraudulent PPP loans, as well as the company’s fraud and money-laundering controls, court papers show.

New York office buildings are facing a potential $50 billion wipeout of value thanks in part to remote work, Bloomberg News reported. The values of those properties declined nearly 45% in 2020 and are forecast to remain roughly 39% below pre-pandemic levels due to the persistence of flexible work policies that gained traction during the crisis, according to a new study from the National Bureau of Economic Research. As the COVID-19 pandemic shuttered office buildings and forced people to switch to a remote work environment, many offices sat vacant and still do, even as companies try to entice employees to return. Roughly 46% of workers in the New York metro area were back at their desks in the week ended Sept. 21, according to card-swipe data from Kastle Systems. The authors of the study, which included researchers from New York and Columbia universities, found that higher-quality buildings are more insulated from the trends, as more tenants seek out better space for their remaining office footprints.

A Manhattan deli known as the nation’s oldest cheese shop was forced to declare bankruptcy amid a lawsuit over the back rent it owes, the New York Times reported. Alleva Dairy in Little Italy filed for chapter 11 on Tuesday in the wake of the tourism-starved pandemic years, according to shop owner Karen King. “Today is one of the saddest days in the 130-year history of this illustrious Little Italy landmark,” King said in a statement after the filing. “We will continue to strive to keep Alleva Dairy alive.” The store, which first opened on Grand and Mulberry streets in 1892, is in jeopardy of closing due to $509,106 in rent it failed to pay during the pandemic, according to a lawsuit filed in April by its landlord.

Criminals potentially stole an estimated $45.6 billion by making fraudulent unemployment insurance claims meant for people laid off during the COVID-19 pandemic, a government watchdog said, the Wall Street Journal reported. The new tally is nearly three times last summer’s estimate of over $16 billion in fraudulent payments. More than half of the potential fraud identified between March 2020 and April 2022 stemmed from individuals filing for benefits in multiple states. Fraudsters also used the Social Security numbers of people who were dead or in prison, as well as suspicious email addresses, the Labor Department’s inspector general’s office said in a report released Thursday. More than 1,000 people have been charged with crimes involving unemployment insurance fraud since March 2020, the report said. The inspector general’s office said it didn’t have access to the most current federal prisoner data for its report and focused on other high-risk areas of fraud. The pandemic unemployment insurance program, started in March 2020, gave those who lost their jobs an extra $600 a week in federal aid at first, which was later reduced to $300 a week. The supplemental benefit expired last year. More than $872 billion in pandemic aid has been paid out since March 2020, according to the inspector general’s office.

The Justice Department said on Tuesday that it had charged 47 people with running a brazen fraud against anti-hunger programs during the coronavirus pandemic, stealing $240 million by billing the government for meals they did not serve to children who did not exist, the New York Times reported. The case, in Minnesota, is the largest fraud uncovered in any pandemic-relief program, prosecutors said, standing out even in a period when heavy federal spending and lax oversight allowed a spree of scams with few recent parallels. The Minnesota operation, prosecutors said, involved faked receipts for 125 million meals. At times, it was especially bold: One accused conspirator told the government he had fed 5,000 children a day in a second-story apartment. Other defendants in the case seemed to put minimal effort into disguising what they were doing, using the website listofrandomnames.com to create a fake list of children they could charge for feeding. Others used a number-generating program to produce ages for the children they were supposedly feeding, which led the ages to fluctuate wildly each time the group updated its list of those nonexistent children, court papers said. But their scheme still pulled in millions of dollars per week, prosecutors said in court papers, because government officials had relaxed oversight of the feeding program during the pandemic and because the other defendants had help from a trusted insider.

Workers are returning to U.S. offices at the highest rate since the pandemic forced most workplaces to temporarily close in 2020, as infection rates continue to fall and more companies intensify efforts to bring employees back, the Wall Street Journal reported. Office use on average was 47.5% of early 2020 levels for workers in the office over the five business days from Sept. 8 to Sept. 14 in the 10 major metro areas monitored by Kastle Systems. The company, which tracks security swipes into buildings, said that was the highest percentage since late-March 2020. Midweek days were especially strong, with office use for Tuesday and Wednesday last week at about 55% of the prepandemic workforce, also a high during the pandemic for those days, Kastle said. The data through last Wednesday were the most recent weekly figures available. Other indicators show a return-to-office pickup after Labor Day. On Wednesday, ridership on the Long Island Rail Road surpassed 200,000 for the first time since March 2020. Metro-North Railroad, another commuter line in the New York region, also reached a high for the pandemic period on Wednesday with 174,900 riders.

A second year of emergency pandemic aid from the federal government drove poverty to the lowest level on record in 2021 and cut the number of poor children by nearly half, the Census Bureau reported yesterday, the New York Times reported. The poverty rate fell to 7.8 percent, down from 9.2 percent the previous year, according to the Supplemental Poverty Measure, a yardstick that includes wages, taxes and the fullest account of government aid. In addition, the share of children living in poverty sank to another record low of 5.2 percent, down 4.5 percentage points from 2020, an acceleration of a long-term trend. The share of people with health insurance at any point during the year rose slightly, to 91.7 percent. In large part, those changes reflect the trillions of stimulus dollars approved by Congress, culminating in the American Rescue Plan of March 2021. Real median household income reached $70,800, not significantly different from 2020, as increases in full-time employment were offset by rising inflation and decreases in unemployment insurance, which had been supplemented above normal levels through the summer of 2021. The “official” poverty rate, generally considered outdated because it omits hundreds of billions spent on programs like tax credits and housing assistance, also did not change significantly from the previous year. The official poverty rate was 11.6 percent last year, but the supplemental rate — which accounts for the impact of government programs — fell to 7.8 percent.