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A proposed bankruptcy loan of up to $125 million for the operator of the Queen Mary Hotel and other high-end lodgings has come under fire from lender Bank of America Corp., which said the financing package benefits the owners and managers but doesn’t do much for the distressed business, <em>WSJ Pro Bankruptcy</em> reported. U.S. units of Singapore-based Eagle Hospitality Real Estate Investment Trust filed for bankruptcy protection Jan. 18, with most of its properties closed. Bank of America said in court papers filed Thursday that a proposed borrowing, supplied by a hedge fund to sustain the enterprise, amounts to a blank check for investors “who, prior to chapter 11, showed an almost preternatural instinct for wasting money.” With 15 properties, only two of them in operation, Eagle Hospitality needs to look for buyers, before the market is glutted with emptied hotels, according to the bank. There are buyers ready to buy and reopen some of the properties, the bank said. The bank’s advisers think it is better to keep the hotels operating at low occupancy, instead of closing them completely. “An open hotel can keep the paint fresh and book rooms for the future. A closed one cannot,” the bank said. Bank of America’s objection was filed in the U.S. Bankruptcy Court in Wilmington, Del., where Eagle Hospitality Group filed its chapter 11 petition and which must sign off on the proposed loan. Another lender, Deutsche Bank AG New York Branch, joined in Bank of America’s objections.

Seadrill Ltd, the rig operator controlled by billionaire John Fredriksen, filed for bankruptcy protection for its Asian units after the economic downturn triggered by the coronavirus pandemic worsened a crisis in offshore oil drilling, Bloomberg News reported. The filing in U.S. Bankruptcy Court in the Southern District of Texas is the second within four years by the driller that was once the industry’s largest by market value. The filing covers Seadrill GCC Operations, Asia Offshore Drilling Ltd., Asia Offshore Rig 1 Ltd., Asia Offshore Rig 2 Ltd. and Asia Offshore Rig 3 Ltd., the company said in a statement early Monday. On Feb. 3, the company said that it obtained a new forbearance agreement from the majority of its senior secured lenders, which gave it time until mid-February to come up with a plan to shore up its finances. Nine of the group’s 12 senior secured credit facility agreements have now been terminated. Norwegian-born shipping tycoon Fredriksen founded Seadrill in 2005 and turned it into the crown jewel of his business empire. But the collapse of crude prices in 2014 forced the company to shrink its operations as oil companies slashed spending on rigs. Seadrill completed an overhaul of its finances in July 2018 but left bankruptcy protection with bank debt of almost $6 billion. The drilling market recovered at a slower pace than the company expected and Seadrill engaged in talks with creditors again last year.

The Senate voted 51-50, after Vice President Kamala Harris broke her first tie, to adopt a budget blueprint for President Joe Biden’s $1.9 trillion virus relief package — following nearly 15 hours of wading through amendments from both parties, Bloomberg News reported. The House had already adopted its budget resolution but will likely have to vote again Friday to agree on the Senate’s language. Once that’s done, Democrats will be able to craft a relief bill in the coming weeks that can pass without any Republican votes under special budget rules — though the White House, moderates like Democratic Senator Joe Manchin of West Virginia and others still say they want a bipartisan final product. House and Senate committees would have until Feb. 16 to write the stimulus legislation under the instructions in the budget. The final action early Friday followed an all-night marathon of votes on amendments known as a vote-a-rama. Most of the non-binding measures were intended more to make points on hot-button issues like taxes, abortion, immigration and schools that had little or sometimes nothing to do with pandemic aid. There were 41 roll call votes during the process.

A disturbing notice from the IRS, coded “CP21C,” informed recipients that the agency was offsetting their stimulus payments because of a possible federal debt they owed — from 14 years ago, the Washington Post reported. The letters were sent in January to more than 109,000 people, according to the Taxpayer Advocate Service. It was a mistake — yet another glitch in the stimulus-relief distribution efforts. “It’s very disheartening,” National Taxpayer Advocate Erin M. Collins said in an interview. “I know that the IRS has its struggles, and we are all trying to be patient because of the pandemic. But at the same time, these are things that just shouldn’t be happening.” This error stems from the IRS’s implementation of two sets of stimulus payments. The Coronavirus Aid, Relief and Economic Security Act, or Cares Act, which passed in the spring, authorized payments of up to $1,200 for individuals and $2,400 for couples filing jointly, based on 2018 or 2019 federal returns. The Cares Act required the IRS to deliver the first round of stimulus payments by Dec. 31. The more recent Coronavirus Response and Relief Supplemental Appropriations Act, passed at the end of December, called for additional stimulus payments of up to $600 per adult ($1,200 for couples). The payments were an advance against a tax credit referred to on the 2020 1040 Form as a “Recovery Rebate Credit.” The advanced payments were eligible to be paid in two rounds during 2020 and early 2021. Congress set deadlines for the IRS to get the payments out. Facing a backlog of 2019 returns, the IRS sent out the CP21C notice to inform people they would have to wait until they filed their 2020 return to receive the relief, because the agency failed to meet the Dec. 31 deadline. The erroneous notices are another example of the consequences of the agency’s antiquated technology, Collins said in a blog post.

Fewer promotions helped the makers of Coach handbags, Versace dresses and Ralph Lauren polos boost profitability in the holiday quarter, even as online gains were unable to make up for pandemic-driven sales declines, the Wall Street Journal reported. Faced with reduced demand as rising COVID-19 outbreaks forced shoppers to continue sequestering at home, many brands scaled back inventory, which helped them avoid the deep discounting of past holiday seasons. At Tapestry Inc., which owns the Coach and Kate Spade brands, net income rose 4% to $311 million in the three months to Dec. 26 driven by reduced promotions and higher average prices. While year-over-year profit declined at Ralph Lauren Corp. 2.51%, the average price of items sold in the period rose 19%—the third consecutive quarter of gains. Kohl’s Corp. , which is scheduled to report results in March, said yesterday that it reached better-than-expected earnings for the holiday quarter, reflecting less inventory and fewer promotions, even as revenue fell about 10%. And some retail chains are predicting that sales will snap back this year. Nordstrom Inc. said yesterday that it expects sales to rise about 25% in the fiscal year that started this month. For the recently completed holiday quarter, sales fell about 20%, the company said.

The number of Paycheck Protection Program loans to U.S. small businesses more than doubled in the third week of the latest round of pandemic relief aid, as Bank of America Corp. and JPMorgan Chase & Co. each processed more than $1 billion in funding, Bloomberg News reported. The Small Business Administration approved 891,044 loans worth $72.7 billion through Jan. 31, up from the 400,580 loans totaling $35 billion a week prior, according to data released on Tuesday. The pace picked up after a slow start following the program’s opening in Jan. 11 with another $284 billion from Congress as part of a stimulus package for the economy. Bank of America moved to the top lender slot in the past week, with about 35,000 loans worth $1.9 billion, followed by JPMorgan. Small lenders and fintech companies, including Zions Bancorp NA and Itria Ventures LLC, continued to out-loan some big banks including PNC Financial Services Group Inc. and Wells Fargo & Co. After the first week was dedicated exclusively to community financial institutions and small lenders, there’s sign of pent-up demand at large banks waiting for their applications to be processed. Wells Fargo has received about 77,000 applications for more than $4 billion, spokesman Manuel Venegas said by email. As of Jan. 31, the San Francisco-based bank had received approval for 18,272 loans, SBA data show. Overall, about three-quarters of the loans approved by the SBA are for borrowers who already received one last year. Under a law passed by Congress in December, companies can apply for a second loan if they can show revenue loss. The average loan size was $81,635, with first-draw loans being much smaller on average. First time business applicants received an average loan of $21,157, whereas second time recipients got $102,228.

President Biden indicated in a call with House Democrats that he was open to sending $1,400 payments to a smaller group of Americans in the next round of coronavirus relief legislation and changing the overall price tag of his $1.9 trillion plan, the Wall Street Journal reported. Biden told House Democrats yesterday that he wouldn’t change the amount of the proposed $1,400 payments, saying people had been promised that amount. Instead, he said he would consider targeting them differently than the previous two rounds of direct aid to Americans. Members of both political parties have questioned whether the $1,400 payments he has proposed would go to people who don’t need the aid. White House press secretary Jen Psaki said later yesterday that Biden is open to changes in the threshold for who would qualify for the $1,400 stimulus checks. “That’s something that has been under discussion,” she said. Biden also said he was flexible on the overall cost of the package, which Democrats have started advancing through Congress through a process that will allow them to pass it along party lines, according to the people familiar with the call. He said Democrats could make “compromises” on several programs in the proposal. Read more. (Subscription required.) 

In related news, House Democrats voted yesterday to set the stage for party-line approval of President Biden’s $1.9 trillion coronavirus relief bill, heeding the president’s calls for swift action on his first big agenda item, the Washington Post reported. The 218-to-212 nearly party-line vote approved a budget bill that would unlock special rules in the Senate allowing Biden’s relief package to pass with a simple majority, instead of the 60 votes usually needed. The Senate is expected to take action on the same legislation later in the week. With the budget resolutions in place, Democrats would be able to get to work in earnest on writing Biden’s proposed relief bill into law — and ultimately pass it without any Republican votes if necessary, though they continued to insist that is not their preference. Read more.