The House of Representatives yesterday approved President Biden's sweeping $1.9 trillion COVID-19 relief package in a starkly partisan 220-211 vote, The Hill reported. No Republican lawmakers backed the legislation, which will become law as much of the nation marks one year of lockdowns from the COVID-19 era. Just one Democrat, Rep. Jared Golden (Maine), opposed the measure. Biden has said that he will sign the measure as soon as it reaches his desk, with the White House saying he's expected to sign it on Friday. The president is set to address the nation tomorrow evening on the coronavirus pandemic. Senate centrists pushed a number of key changes to the House-passed bill to the frustration of progressives, including keeping the weekly unemployment insurance supplemental payments at the current $300 instead of increasing them to $400 as under the initial House bill. Unemployment insurance payments will run through Sept. 6, and up to $10,200 of the benefits will be exempt from taxes.
The Southern District of Texas saw a surge in commercial bankruptcy filings during 2020, drawing a caseload second only to Delaware's during the coronavirus pandemic, which attorneys attribute to the accessibility, ingenuity and predictability of a pair of Houston judges who have spent years giving the district a high profile, Law360 reported. Houston's bankruptcy court tallied 1,363 chapter 11 filings in 2020, almost quadrupling the 361 cases filed in the district in 2019, and making it the second-busiest bankruptcy docket behind Delaware, which saw 1,628 filings. Houston far outpaced the third-busiest docket in the country, the Southern District of New York, which reported 692 filings, according to U.S. Courts data. While the pandemic forced more businesses than normal into bankruptcy last year, Lone Star State attorneys told Law360 there's more to Houston's growing chapter 11 docket than COVID-19. A two-judge complex case bench known for its nearly round-the-clock availability, willingness to walk counsel through tough situations, openness to creative reorganization plans and proven track record has helped establish the Southern District as a commercial bankruptcy hotspot in recent years. In 2020, a variety of companies filed for bankruptcy in Houston, which has long had an oil and energy industry-heavy docket. Large restaurant chains based in California, such as California Pizza Kitchen Inc. and Chuck E Cheese's parent company CEC Entertainment Inc., filed for chapter 11 protection in the Southern District of Texas. Massachusetts-based Friendly's Restaurants LLC and Kansas-based NPC International Inc., the largest Pizza Hut and Wendy's franchisee in the country, also chose Houston.
Small-business advocates are calling on the federal government to extend the March 31 deadline to apply for a loan from the Paycheck Protection Program, citing recent changes made to the program and delays in processing applications, the Wall Street Journal reported. “Time is not on our side. These businesses need a little more help, and they’re willing to do the work,” Hilda Kennedy, president of the PPP lender AmPac Business Capital, said yesterday during a House Small Business Committee hearing focused on the future of the program. Kennedy was speaking of the very smallest firms, such as those owned by sole proprietors. “We need more time to serve them,” she added. As of March 7, the Small Business Administration had approved 2.4 million loans totaling roughly $165 billion, or nearly 60% of available funds, for loans to first-time and returning borrowers under the reopened program, according to agency data. Lenders issue the loans, and the SBA guarantees them. Advocates say a deadline extension would give lenders more time to implement the administration’s recently announced changes and inform small businesses about how the revisions could benefit them. Read more. (Subscription required.)
Click here for the replay, witness list and prepared testimony for the House Small Business Committee's hearing from yesterday titled "The Next Steps for the Paycheck Protection Program."
The House Financial Services Subcommittee on Consumer Protection and Financial Institutions will hold a virtual hearing today at 10 a.m. EDT titled "Slipping Through the Cracks: Policy Options to Help America’s Consumer During the Pandemic." To obtain a link to the live webcast of the hearing, view the legislation to be examined and view the witness list, please click here.
Thomas H. Lee Partners is nearly doubling a fund to assist former workers at its bankrupt Art Van Furniture chain, after months of pressure from employees who said a payment of around $400 each was “grossly inadequate,” Bloomberg News reported. The private equity firm is adding $950,000 to a $1.1 million fund it established last year, according to United for Respect, the group that worked with former employees to demand health coverage or cash assistance after Art Van filed for bankruptcy last year. A representative for Boston-based T.H. Lee, which manages $11.6 billion, declined to comment on the decision. The firm had previously said that it couldn’t increase the size of the fund because it lost its own investment in Art Van. Art Van was a family-run chain founded by Art Van Elslander in Detroit in 1959. By 2015, Art Van had 100 stores and $725 million in annual sales. The family sold in 2017, with T.H. Lee paying $215 million to take over the retail operations. A separate group of funds purchased its real estate. The furniture business soon began to deteriorate, and Art Van filed for bankruptcy early last year, just as the impact of the coronavirus pandemic was starting to hit the U.S.
The Canadian Football League and the XFL are exploring a potential partnership as they seek to return to play in the aftermath of the COVID-19 pandemic, USA Today reported. The leagues announced yesterday that they "have agreed to work together to identify opportunities for the leagues to collaborate, innovate, and grow the game of football," though they did not offer specifics about what such a patnership would entail. The XFL also said it is putting its plans for the 2022 season on hold as discussions continue. The CFL canceled its 2020 season but is hoping to return to play June 10. The CFL has long been considered one of the top professional football leagues outside of the NFL, regularly attracting top undrafted players from the United States or serving as a launching pad for those hoping to reach the NFL. The XFL also experienced moderate success in 2020 — its first season since relaunching — before shutting down in the wake of COVID-19. Since the cancellation of its season, the XFL has since filed for chapter 11 protection and been purchased for $15 million by a group of investors that includes Garcia, actor Dwayne "The Rock" Johnson and RedBird Capital Partners.
The House is poised to send the $1.9 trillion COVID-19 relief plan to President Joe Biden for his signature, providing an economic boost that will last long after $1,400 stimulus checks start arriving in Americans’ accounts this month, Bloomberg News reported. With four days until supplemental unemployment benefits begin running out, House Democratic leaders expect passage today. The bill provides a template for a potential longer-term expansion of an American social-safety net that has long been much smaller than its European counterparts. Democrats say the near-$110 billion temporary expansion of the child-tax credit will help cut child poverty in half, while tax forgiveness on jobless benefits and student-debt relief will give help to millions more. Economists this week were upping their projections for growth to incorporate the impact. Morgan Stanley on Tuesday raised their 2021 forecast for U.S. economic growth to 7.3% from 6.5%, a pace unsurpassed since the Korean War boom in 1951. The OECD the same day more than doubled its own estimate. Read more.
In related news, Senate Finance Committee Chairman Ron Wyden (D-Ore.) said yesterday that he plans to introduce legislation to prevent the $1,400 direct payments in Democrats' coronavirus relief package from being seized by private debt collectors, The Hill reported. "While Democrats intend to protect the third payment from private debt collectors, Senate rules did not allow us to include that protection in the American Rescue Plan," Wyden said in a statement. "I will be introducing standalone legislation to ensure families receive their much-needed relief payments." Direct payments of up to $1,400 per person are a key part of the $1.9 trillion coronavirus relief package that passed the Senate over the weekend. Democrats say the payments will help people who are struggling financially because of the pandemic cover important expenses. The Senate passed the coronavirus relief package on Saturday using the budget reconciliation process so that the chamber could approve the measure with a simple majority vote. Under Senate rules, reconciliation bills can't include provisions that don't have an impact on the federal budget. Read more.
States have avoided a Great Depression-scale cash crisis. Despite the pandemic’s crushing toll on the economy, total state tax revenues were roughly flat in 2020 from the year before, according to the Urban Institute, a Washington, D.C., think tank, the Wall Street Journal reported. Last spring, stores shut down to contain the spread of COVID-19 and unemployment skyrocketed. People spent less money on everything from shoes to restaurants to salons. Sales tax collections fell billions of dollars short of forecasts. But widespread federal intervention buoyed households, businesses and financial markets and helped avert analysts’ doomsday projections for state revenues. The stable employment environment for the country’s most affluent workers also brought in stronger than expected tax revenue. Analysts still expect states to confront budget gaps as the pandemic enters its second year, but they are projecting smaller shortfalls partially filled in with federal aid. A Democrat-led Congress is now debating another massive round of federal aid, amid objections from Republicans. The cash that would help contain the crisis began trickling in around the country in early spring with congressional approval of a $2 trillion stimulus package. The federal government sent checks for $1,200 to many households, and Americans spent about 29% of those checks, according to the Federal Reserve Bank of New York, further boosting state sales tax revenues.
Offshore oil-rig operator Seadrill Ltd. is making a last-ditch effort to reach agreement on a balance-sheet reshaping to appease creditors that are clamoring for a sale, WSJ Pro Bankruptcy reported. Over the next 60 days, the twice-bankrupt company will try to persuade warring camps of lenders to agree on a reorganization proposal, Seadrill lawyer Ross Kwasteniet said at a hearing Tuesday in the U.S. Bankruptcy Court in Houston. At that session, Seadrill won approval of an order that represents a temporary truce between lenders that want to sell key parts of the company and other creditors that want to hold it together. Talks that began last year failed to produce an agreed restructuring of the complex business, which has a dozen different debt stacks and operations around the globe. Seadrill’s distress attracted interest among investment funds, which bought its debt, Mr. Kwasteniet said. Some of those investors have stakes in Seadrill competitors and could have ulterior motives in pressing for a sale, the company’s lawyer said. Low prices and depressed demand for oil and gas have rig operators under pressure, and Seadrill’s customers, which include major oil companies, nations and independent operators, are reining in production. When Seadrill filed for bankruptcy in February, most of its 34 rigs were idle and it owed $7.2 billion to lenders and lease counterparties, according to court papers.
