%1

The federal government is preparing to open two new industry-specific small-business relief programs, one of them months in the works, as its signature pandemic aid effort, the Paycheck Protection Program, nears its end, the New York Times reported. The Small Business Administration said it hopes to start taking applications by the end of this week for a $16 billion grant fund for live-event businesses like theaters and music clubs. The program, the Shuttered Venue Operators Grant, was supposed to begin nearly two weeks ago, but its application system malfunctioned and collapsed, stymieing thousands of desperate businesses that have been waiting months for the promised aid. On Saturday, the agency posted additional details on its forthcoming Restaurant Revitalization Fund, a $28.6 billion support program for bars, restaurants and food trucks whose sales were devastated by the shutdowns that states imposed in response to the pandemic. The fund was created as part of last month’s $1.9 trillion economic support package. Within the next two weeks, it will begin a seven-day test intended to help the agency avoid the kind of technical fiasco that plagued the venue program. The agency has not announced a specific start date for either grant program. “Help is here,” Isabella Casillas Guzman, the agency’s administrator, said of the restaurant program. “We’re rolling out this program to make sure that these businesses can meet payroll, purchase supplies and get what they need in place to transition to today’s Covid-restricted marketplace.” Both programs offer recipients grants of up to $10 million to replace a portion of their lost sales. But both programs — which will distribute money on a first-come-first-served basis, subject to some priority rules — are expected to run out of money quickly. The money in the restaurant fund, in particular, falls far short of its needs, agency officials have acknowledged. “Everyone should apply on Day 1,” Patrick Kelley, the head of the agency’s Office of Capital Access, told attendees at a webinar last week organized by the Independent Restaurant Coalition. Lawmakers projected at least $120 billion in demand for the restaurant fund, Mr. Kelley said, but provided money for less than a quarter of that amount. The law creating the restaurant fund required a 21-day exclusive period for businesses that are majority-owned by women, veterans or socially disadvantaged individuals. The S.B.A. said that group includes those who are Black and Hispanic, as well as Native Americans, Asian-Pacific Americans and South Asian Americans.

The Consumer Financial Protection Bureau (CFPB) issued a rule yesterday enabling renters to sue debt collectors who fail to disclose the rights of tenants established in a recent federal eviction moratorium, the National Mortgage News reported. The Centers for Disease Control and Prevention announced the freeze on evictions due to the coronavirus pandemic last year. It prevents evictions in cases where tenants filed a written declaration of their inability to pay. A tenant who has not filed such a declaration can still be evicted. The moratorium ends June 30. The CFPB's interim rule requires debt collectors seeking to evict tenants to provide written notice of their rights under the CDC moratorium. The rule also prohibits debt collectors from misrepresenting tenants’ eligibility for protection from eviction. “No one should be evicted from their home without understanding their rights, and we will hold accountable those debt collectors who move forward with illegal evictions,” said acting CFPB director Dave Uejio in a press release. “We encourage debt collectors to work with tenants and landlords to find solutions that work for everyone.” The CFPB rule clarifies that debt collectors who fail to provide tenants written notice of their rights under the CDC moratorium are in violation of the Fair Debt Collection Practices Act. The rule, which will be effective May 3, applies to third-party debt collectors and attorneys acting on behalf of landlords.

The Consumer Financial Protection Bureau (CFPB) is scrutinizing mortgage servicers' compliance with pandemic relief programs amid concerns struggling homeowners are not getting the help they need to avoid foreclosures, or are being discriminated against, Reuters reported. The CFPB crackdown by its policy, supervision and enforcement divisions could result in stiff penalties for those mortgage servicers found to have hurt borrowers, the regulatory officials, lawyers and industry executives said. In recent weeks, the agency has sent data requests to mortgage servicers, usually a company or a bank that processes mortgage repayments. It is seeking data on how they are handling mortgage holiday or "forbearance" programs and whether the temporary debt relief is likely to get borrowers back on their feet, said three people with direct knowledge of the matter, some of whom asked to remain anonymous because aspects of the discussions are private. The agency has also opened probes into a handful of mortgage servicers over their handling of forbearance requests.

A bidding war over Hertz Global Holdings Inc. intensified as previously outbid investors returned to the table with a counteroffer for the bankrupt car-rental company, backed by Apollo Global Management Inc. and existing Hertz shareholders, WSJ Pro Bankruptcy reported. Investment firms Knighthead Capital Management LLC and Certares Management LLC, which previously offered to buy Hertz out of chapter 11 only to be eclipsed by a competing investor group, returned with a sweetened bid late Thursday that values Hertz at $6.2 billion. Apollo has agreed to supply up to $2.5 billion in preferred equity financing for the proposed restructuring, which unlike the prior offers would pay off the rental-car company’s funded debt in full. The revised bid challenges a restructuring offer that Hertz accepted earlier this month, backed by Centerbridge Partners LP, Warburg Pincus LLC and Dundon Capital Partners LLC and valuing the company at about $5.5 billion. The competing proposal presents a choice for Hertz, which is racing to exit from bankruptcy by the end of June and has already put the restructuring terms it selected earlier this month up for approval from the U.S. Bankruptcy Court in Wilmington, Del.

Bankruptcies by North American oil producers rose to the highest first-quarter level since 2016, according to a report released on Thursday by law firm Haynes and Boone, as some energy firms struggled to recover from the 2020 crash in oil prices, Reuters reported. There were eight bankruptcies by North American oil and gas producers in the first quarter of 2021, versus 17 in the first quarter of 2016 — the last time U.S. crude futures dipped under $30 a barrel. Prices have bounced back from year-ago lows, trading around $63 a barrel on Thursday. The first quarter was marked by filings from relatively smaller firms, with just $1.8 billion in aggregate debt for the quarter. Last year, companies that filed for bankruptcy held $53 billion in aggregate debt, the highest total since 2016, when debt among filers totaled $56.8 billion, according to the report. HighPoint Resources Corp was the largest debt-holder to file for the quarter, with $905 million in secured and unsecured debt.

President Biden is coming under fire from housing advocates who say his administration is turning a blind eye as landlords seek to boot tens of thousands of cash-strapped renters from their homes despite a nationwide eviction freeze, The Hill reported. Tenant rights groups say the Department of Justice (DOJ) has yet to file a single criminal charge for violations of the Centers for Disease Control and Prevention (CDC) eviction moratorium, which carries penalties of up to $200,000 and a year in jail. “I think it would be helpful if they prosecuted landlords who are violating the law,” said Isaac Sturgill, an attorney at Legal Aid of North Carolina. “From my knowledge, DOJ hasn’t been enforcing the order. It does make it look more like a paper tiger.” Enacted in September as a public health measure, the CDC order aims to mitigate the spread of coronavirus by helping financially distressed tenants remain in their homes, instead of forcing them into homeless shelters or other crowded living spaces. Since then, however, the federal eviction protections have steadily eroded. A catchphrase has even emerged among some tenants’ advocates to sum up the current beleaguered state of the CDC moratorium: “It’s better than nothing.” “It’s getting weaker as time goes on,” Sturgill said. “People are figuring out more and more ways around it, and landlords are getting more and more emboldened to ignore it.” Housing advocates say three developments have primarily undercut the protections: Trump-era guidance that put a thumb on the scale for landlords, a slew of lawsuits against the moratorium and efforts by pro-landlord attorneys to exploit legal loopholes.

Department stores, once a middle-class mainstay of convenience and indulgence, had been spiraling downward long before the pandemic turbocharged online shopping and helped tip a number of big-name retailers into bankruptcy. Nearly 200 department stores have disappeared in the past year alone, and another 800 — or about half the country’s remaining mall-based locations — are expected to shutter by the end of 2025, according to commercial real estate firm Green Street Advisors, the Washington Post reported. Those closures, analysts say, will have a cascading effect on American shopping malls, which already are battling record-high vacancy rates and precipitous drops in foot traffic, as well as on the commercial real estate market and the broader economy. The pandemic set off an economic chain reaction that rippled through the country’s department store chains, forcing several into chapter 11 proceedings. Neiman Marcus, Stage Stores and J.C. Penney filed for bankruptcy last May, followed by Lord & Taylor and, most recently, Belk in February. Even companies on relatively stable footing, like Macy’s, are shuttering dozens of stores as they try to move away from traditional shopping malls. Overall sales at department stores plunged more than 40 percent at the beginning of the pandemic and have yet to make up for lost ground, according to Commerce Department data, as Americans do more of their shopping online and gravitate to specialty brands and discount chains. 

Despite a rebound in the U.S. travel industry, bankrupt Hertz Global Holdings Inc. said it is still insolvent and that its stockholders will come away empty-handed in its proposed reorganization, WSJ Pro Bankruptcy reported. The rental car provider made the statement Thursday in a court filing that rebuts the claims of a committee of hedge-fund shareholders that Hertz equity is in the money. Hertz today is scheduled to appear in the U.S. Bankruptcy Court in Wilmington, Del., to seek approval of a blueprint for a chapter 11 reorganization that began last year. Such disclosure statements are required to include sufficient information to allow creditors of bankrupt companies to make informed decisions on whether to vote for a proposed restructuring. Hertz, which hopes to exit bankruptcy by June as the travel industry rebounds from a downturn brought on by the COVID-19 pandemic, said a valuation analysis expected to be filed publicly will show the company is insolvent, with insufficient value to cover its debt and no surplus left over for stockholders. The company also said it has conducted a competitive process seeking bids for control of the reorganized business. Neither of the two serious proposals that have surfaced have yielded enough proceeds for shareholders to receive a recovery, Hertz said.