Cruise operator Norwegian Cruise Line Holdings Ltd said on Monday it would require mandatory COVID-19 vaccinations for all guests and crew when it restarts trips from U.S. ports in July, Reuters reported. The company’s announcement follows the U.S. Centers for Disease Control and Prevention’s (CDC) latest guidance last week to the cruise ship industry, including the need for COVID-19 vaccinations. The cruise operator has taken a hit for over a year due to the pandemic, resulting in heavy annual losses and plunging revenue, forcing it to take new steps to ensure customers can set sail again.
When the $2.1 trillion Cares Act was enacted just over a year ago, Democrats in Congress, mistrustful of the Trump administration’s ethical track record, made robust policing a top priority for the gusher of new spending, the Washington Post reported. The law, intended to stem the economic pain caused by the coronavirus pandemic, created new oversight bodies and directed more than $270 million to new and existing watchdogs. A House subcommittee with the power to issue subpoenas quickly got to work with queries to private corporations and government agencies. One year later, the conversation in Washington over how to oversee a new, nearly $2 trillion relief package administered by the Biden administration is decidedly more muted. The latest legislation, called the American Rescue Plan, created no new oversight bodies, although it appropriated more than $200 million in new funding for existing ones. To date, more than $5 trillion in government spending has been appropriated to respond to the pandemic and ensuing economic calamity. Yet, over the past year, oversight from three separate watchdog entities has been either undermined by partisan disagreements, slowed by bureaucratic hurdles or constrained by funding, according to interviews with those tasked with carrying out oversight, outside experts and advocates. One of the watchdogs created by the Cares Act has yet to receive a chair, hampering its work. Another watchdog faces budget constraints with just three dozen full-time staff so far.
The vise is tightening on owners of restaurants, fitness centers and other small U.S. businesses trying to hold on until the economy fully reopens. And unlike at most big companies, the burden is often deeply personal, the Wall Street Journal reported. Small-business owners taking on debt or signing a lease often end up providing a personal guarantee, in which they promise to be responsible for the payments if the business can’t pay. Increased vaccination rates, the loosening of state restrictions and the $1.9 trillion stimulus package are raising hopes that these businesses can make it through. At the same time, the weight of those guarantees isn’t dissipating. Many businesses have accrued debt after deferring rent, loan and other payments, and owners worry the stimulus funds will only go so far. Nearly 60% of small businesses with employees that took out loans used personal guarantees to secure business debt, according to a survey released by the regional Federal Reserve Banks in 2020. Forty-four percent of small firms with employees have more than $100,000 in debt and 8% owe more than $1 million, according to a separate regional Fed survey released this year. The weight of personal guarantees has grown as the pandemic has stretched on, increasing the amount small-business owners owe and forcing many to draw down savings. Many businesses have had to close and reopen more than once, adding to their costs. A survey completed in late March by the U.S. Census Bureau found that 18% of small businesses said they would need to obtain financial assistance or additional capital in the next six months.
Hertz Global Holdings Inc. said it chose an “enhanced” offer from Centerbridge Partners, Warburg Pincus and Dundon Capital Partners to provide equity capital for the rental-car company’s exit from chapter 11, Bloomberg News reported. The deal, which is subject to bankruptcy court approval, has the support of holders of more than 85% of the company’s unsecured notes, Hertz said, a level of backing that gave it a “clear advantage” over a competing offer. The company earlier received a rival proposal from Knighthead Capital Management and Certares Management. “We look forward to emerging from chapter 11 in the second quarter financially and operationally stronger, and well-positioned to achieve the opportunities in the rebounding travel market,” Paul Stone, Hertz’s chief executive officer, said in the statement Saturday. The company remains on track to exit from its bankruptcy in June. The announcement comes a day after the U.S. Centers for Disease Control and Prevention said vaccinated individuals don’t need a COVID test and don’t need to quarantine when traveling domestically. Hertz filed for bankruptcy in May when the near-total shutdown of the global travel industry sent its rental revenues plunging. It became a popular stock among day traders, who sent shares of the bankrupt company soaring against conventions. Hertz made a short-lived effort to raise funds after its bankruptcy filing by selling stock, but abandoned it after the U.S. Securities and Exchange Commission questioned the plan. The supporting noteholders have agreed to support the exchange of the unsecured funded debt claims against Hertz for about 48.2% of the equity in the reorganized company and the right to purchase an additional $1.6 billion of equity. They have also committed to purchase, or otherwise backstop, the full $1.6 billion of equity being offered to the holders of Hertz’s unsecured funded debt.
A greater share of people with low credit scores has been falling behind on their car payments in recent months, a sign of stress among consumers whose finances have been hit hard by the pandemic, the Wall Street Journal reported. Some 10.9% of subprime borrowers with outstanding auto loans or leases were more than 60 days past due in February, up from 10.7% in January and 8.7% a year prior, according to credit-reporting firm TransUnion. It marked the sixth consecutive month-over-month increase and the highest level in monthly data going back to January 2019. More than 9% of subprime auto borrowers were more than 60 days past due in the fourth quarter, the highest quarterly figure in data going back to 2005. The missed payments are increasing in what has otherwise been a period of relatively low consumer delinquencies, with stimulus payments, unemployment benefits and other measures keeping many borrowers afloat. The rising subprime delinquencies point to an uneven economic recovery and a deep divergence between those who can navigate the coronavirus downturn and those who can’t.
The amount of office space available in Manhattan is at the highest level in at least 30 years, Bloomberg News reported. The availability rate jumped to 17.2% in the first quarter, according to a report Thursday by Savills. Much of that was driven by a surge in sublease space, which reached 22 million square feet (2 million square meters), 62% higher than before the pandemic, the real estate services firm said. “Abundant short- and long-term options are driving price reductions,” Savills said in the report. “Many owners are proposing historically aggressive rates, concessions and flexibility to secure tenants amid so much competition.” New York’s office market has taken a hit from a pandemic that has kept many workers home for months. A year after the city shut down, vaccines are raising hopes for a return to the office. The tenants actively looking for space in the market are seeking deals. Asking rents fell for the fifth straight quarter to $76.27 a square foot, down 9% from a year earlier, with growing competition from cheaper subleases. Concessions for long-term leases at newer office buildings also rose: Average tenant improvement allowances jumped 16% and free rent surged 17% to an average of 13.5 months. The tenant-friendly market is expected to last for at least the next 12 to 18 months, Savills said.
While 2020 was an exceptional year for U.S. corporate bankruptcies, a larger share of distressed companies upended by the COVID-19 pandemic is using court processes to restructure instead of close shop, according to S&P Global Market Intelligence data. Nearly 62% of U.S. corporate bankruptcy filings in 2020 sought reorganizations, the highest rate for any year going back to at least 2010, according to S&P Global. Companies were less likely to liquidate in 2020, a departure from 2019 and 2018 when corporate liquidations outpaced reorganizations in bankruptcy filings. As of March 30, the share of filings seeking restructuring is larger in 2021 than in 2020. Reorganizations have been increasingly prevalent as otherwise healthy companies use the bankruptcy process to navigate the extreme environment created by the pandemic, experts say. Creditors and debtors have struck deals prior to bankruptcy filings, and there have been many asset sales to preexisting lenders and bondholders, Joshua Friedman, global head of restructuring data at Debtwire, said in an interview. "We've seen significant chapter 11 activity with the goal of protecting the business," Friedman said. Retail sales plunged in April 2020 in the wake of lockdown measures aimed at stifling the spread of the coronavirus. Even when some states lifted restrictions, businesses faced depleted consumer confidence during the initial months of the pandemic. Stimulus money and a higher number of asset sales could be steering more companies to reorganize rather than liquidate, Connor Murphy, a director at Burford Capital, a global finance firm focused on law, said in an interview. Many companies that entered chapter 11 bankruptcy over the past year did so because they needed help navigating the "zero-revenue environment" created by the pandemic, Murphy said.
AMC Entertainment Holdings Inc. is exploring using a possible equity issuance to pare debt obligations or overdue rent, the theater chain’s chief executive said, WSJ Pro Bankruptcy reported. If shareholders authorize the issuance of up to 500 million additional shares, as AMC has proposed, the company would consider using proceeds from stock sales to buy back debt at a discount or issuing shares to landlords as compensation for deferred rent, CEO Adam Aron said in an interview. The company also could keep the proceeds as a cash buffer against a longer-than-expected recovery from the coronavirus pandemic. When AMC has recovered from the industrywide downturn, the company also would consider using shares or proceeds from stock sales to acquire other movie theater chains or related businesses, Mr. Aron said. Leawood, Kan.-based AMC, the world’s largest movie theater chain with close to 1,000 locations, came close to running out of cash during the pandemic, and even created a contingency plan in case it had to file for bankruptcy.
The bones of Brooks Brothers stores are scattered across 100,000 square feet here in a warehouse near the Massachusetts border, mixed in with a sea of cardboard boxes and junk, the New York Times reported. There are legions of mannequins, empty circular tables that once displayed neckties, posters of horseback-riding gentlemen from a bygone era. There is a whole section of Christmas trees and countless gold-painted ornaments of sheep suspended by ribbon — a Brooks Brothers symbol since 1850 known as the Golden Fleece. Blank order forms for tailors are strewn about. A neon sign that apparently still works. There is no apparel, but there are rows of heavy sewing machines that most likely came from one of the brand’s recently shuttered factories. And in the bathroom, a welcome carpet with Brooks Brothers written in cursive sits next to a toilet. The whole mass was abandoned here in the fallout of Brooks Brothers’ bankruptcy filing and sale last year, the scraps of a retailer that made nearly $1 billion in sales in 2019. Ever since, the couple that owns the warehouse, Chip and Rosanna LaBonte, has been scrambling to figure out how to get rid of it all. Junk removal companies have told them it will cost at least $240,000 to clear the space, which Brooks Brothers had rented through November. In order to pay the bill, the LaBontes are going to have to sell their home. The couple’s plight illustrates the far-reaching consequences of retail bankruptcies, which cascaded during the pandemic and affected everyone from factory workers to executives. Smaller vendors and landlords have often been left holding the short end of the stick during lengthy byzantine bankruptcy proceedings, particularly with limits on what they can spend on legal bills compared with larger corporations. And once bankrupt brands are sold, people like the LaBontes are typically left in the dust.
