%1

Forty-six exploration and production companies and 61 oil-field service companies filed for chapter 11 bankruptcy last year, according to Haynes and Boone, a Dallas-based law firm tracking bankruptcies, the Houston Chronicle reported. The 107 oil and gas bankruptcies in 2020 were the most since 142 bankruptcies were filed during the last oil bust in 2016. Oil and gas companies have been hit hard by the coronavirus pandemic, which crushed global demand for crude and petroleum products such as gasoline and jet fuel. Unlike past downturns, oil and gas companies have been under increased financial pressure after many investors pulled out of the sector in 2018 after years of low-to-middling performance. Several energy companies said that they were forced to file for bankruptcy after lenders pulled credit lines as revenue dried up. More than a fifth of the bankruptcies last year — 14 exploration and production companies and nine oil-field service companies — brought more than $1 billion of debt to court. Multibillion-dollar bankruptcy cases were filed by Chesapeake Energy ($11.8 billion), Diamond Offshore Drilling ($11.8 billion) and California Resources ($6.3 billion). Ultra Petroleum filed for its second bankruptcy in five years, bringing $5.6 billion to court in 2020. Since the previous oil bust ended in 2016, oil and gas companies brought more than $286 billion of debt to court. During 2020 alone, more than $98 billion has been brought to court, compared with $70.3 billion during the previous oil bust, Haynes and Boone said. Read more. 

Get a better understanding of what happens when an oil, gas or other natural resources company goes bankrupt. Order your copy of ABI's revised and expanded When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy, Second Edition. 

President Biden will issue an executive order on Friday aimed at steering additional federal aid to families struggling to afford food amid the pandemic and at helping workers stay safe on the job, the New York Times reported. Biden, who has vowed to use the power of the presidency to help mitigate economic fallout from the pandemic, will also direct the Treasury Department to find ways to deliver stimulus checks to millions of eligible Americans who have not yet received the funds. The president also plans to sign a second executive order that will lay the groundwork for the federal government to institute a $15 an hour minimum wage for its employees and contract workers, while making it easier for federal workers to bargain collectively for better pay and benefits. Biden has issued a series of economic orders in his first days in the White House, which his aides have cast as emergency relief for Americans struggling in the COVID economy. He has also called on Congress to approve a $1.9 trillion economic rescue package in the coming weeks.

Specialty retailer Francesca’s Holdings Corp. has won court approval to sell its remaining business out of bankruptcy to a group of buyers that plan to keep open about half of the chain’s roughly 550 stores, WSJ Pro Bankruptcy reported. Judge Brendan Shannon of the U.S. Bankruptcy Court in Wilmington, Del., said on Thursday he would approve the sale of substantially all of Francesca’s assets to an affiliate of investment firm TerraMar Capital LLC and appraisal and liquidation firm Tiger Capital Group LLC, one of Francesca’s lenders. “This is a frankly very, very welcome result,” Judge Shannon said during a hearing Thursday held by video. “This is an extraordinarily challenging environment and to come up with competing, going concern sales and the opportunity for a robust auction, that would not have been anyone’s likely prediction at the outset of this process.” Los Angeles-based TerraMar, which served as the lead bidder along with Tiger, agreed to a purchase price of $18 million in cash, subject to certain adjustments, plus a promissory note for $1.25 million and the assumption of about $7.74 million in liabilities. The deal, which could close by next week, will preserve the business as a going concern with at least 275 Francesca’s boutiques. As of Tuesday, Francesca’s operated 551 locations, mostly in malls across the U.S. About 140 stores were shut before Francesca’s filed for chapter 11 bankruptcy in December.

On his first day in office, President Biden signed a range of executive actions including two that will affect the financial lives of millions of Americans. One directs the Education Department to extend the pause on federal student loan payments, and the other directs the Centers for Disease Control and Prevention to extend the federal eviction moratorium, the Wall Street Journal reported. Both measures were put in place last year in response to economic hardships caused by the COVID-19 pandemic. The executive order for federal student loans directs the Education Department to extend the pause on principal payments and interest accrual for direct federal loans until at least Sept. 30, 2021. Loan repayments and interest accrual has been paused for borrowers with federal student loans since March 13, 2020. Collection on defaulted loans has been suspended as well. More than 22 million borrowers with direct federal student loans paused payments during this period, according to data analyzed by Mark Kantrowitz, publisher and vice president of research at savingforcollege.com. Many borrowers were hoping for an executive order from President Biden that would forgive some of their debt. During his campaign, Mr. Biden proposed forgiving $10,000 in debt for every American with federal student loans. In recent days, Mr. Biden and his transition team said he was unlikely to use executive action for loan forgiveness.

The Small Business Administration said on Tuesday that roughly 60,000 borrowers were approved for more than $5 billion in forgivable loans during the first week of the reopened Paycheck Protection Program, the Wall Street Journal reported. The small-business coronavirus relief effort relaunched Jan. 11 after closing last August. The first wave of applications was largely handled by community and small lenders after the SBA set aside time for them to process the loans exclusively. The program’s restart comes as many small businesses continue to struggle with the fallout from the pandemic. One-third of small businesses surveyed between Jan. 4 and Jan. 10 said they would need financial assistance or additional capital in the next six months, according to the Census Bureau, up from nearly 25% in mid-November. The average PPP loan size was below $20,000 for first-time borrowers and below $75,000 for second-time borrowers for applications processed through Jan. 17, according to an SBA spokesman, a sign the loans were being approved for smaller businesses. Loan amounts are based on the size of an applicant’s payroll. The average loan size was $206,000 during the program’s initial launch last April and was $101,000 at the program’s close last August.

The U.S. Senate Finance Committee scheduled a meeting for Friday to consider the nomination of Janet Yellen for Treasury Secretary, raising the possibility that she could be confirmed by the full Senate later that day, Reuters reported. The new administration of President Joe Biden is pushing for speedy confirmation of key cabinet members to accelerate efforts to fight the COVID-19 pandemic and move forward with economic relief measures. As the Senate continues to consider Yellen’s nomination, the Treasury Department on Wednesday named several people to senior Treasury posts that do not require Senate confirmation. Yellen urged lawmakers on Tuesday to “act big” on coronavirus relief spending, arguing that the economic benefits far outweigh the risks of a higher debt burden. Committee members had until Wednesday evening to submit additional questions related to Yellen’s confirmation hearing, putting pressure on Yellen to respond and on the Senate to act before lawmakers head home for the weekend. One source familiar with the congressional process said a second hearing was unlikely. 

Restaurant franchisee NPC International Inc. won court approval to sell more than 1,300 Pizza Hut and Wendy’s restaurants for about $800 million, six months after the coronavirus pandemic pushed the company into bankruptcy, Bloomberg News reported. Under two deals approved yesterday by U.S. Bankruptcy Judge David Jones, Flynn Restaurant Group will take over 951 Pizza Hut locations and nearly 200 Wendy’s stores, according to court filings. Wendy’s Co. will take over another 200 of its namesake restaurants and then turn them over to a group of its franchisees. The agreements won the support of Pizza Hut and Wendy’s, which were involved in negotiating terms of the sales, attorneys for the two restaurant companies said in court. When NPC filed for bankruptcy last year, it operated more than 1,200 Pizza Hut locations and nearly 400 Wendy’s restaurants. In November, NPC called off auctions for its Pizza Hut and Wendy’s restaurants because the offers were too low, an NPC lawyer said last month. Instead, the company entered into settlement talks that ultimately led to the current deal.

KKR & Co. Inc., Blackstone Group Inc. and other big lenders to department store chain Belk Inc. are in talks with the company to keep it out of bankruptcy after the chapter 11 process proved difficult for other retailers during the COVID-19 pandemic, WSJ Pro Bankruptcy reported. While Charlotte, N.C.-based Belk isn’t guaranteed to reach a restructuring agreement, the company, its lenders and private equity owner Sycamore Partners are getting closer to an out-of-court deal. Like other department store chains, Belk has struggled with a pullback in retail foot traffic during the COVID-19 pandemic as stuck-at-home consumers turn to online shopping. Belk’s negotiations with lenders focus on fixing the company’s balance sheet, possibly through a debt-for-equity swap or fresh financing. Bloomberg News earlier reported the negotiations. KKR and Blackstone are interested in converting part of Belk’s $2.6 billion debt into equity, possibly under an out-of-court deal that would allow Sycamore to retain an ownership stake.

Manhattan’s retail pain is worsening as the pandemic drags on, with rents falling in every major shopping district, Bloomberg News reported. Soho was hit the hardest in the fourth quarter, with average asking rents dropping nearly 22% to $290 a square foot, according to a report by brokerage Cushman & Wakefield Plc. Rents in the area, known for its many fashion boutiques, have been sliding over the past four years. Asking rents tumbled 20% on lower Fifth Avenue — running from 42nd to 49th streets and dominated by big national chains. Upscale Madison Avenue saw a 16% decline. Manhattan’s retail woes have intensified over the past year as social-distancing measures and COVID-19 spikes continue to keep shoppers home. Few businesses are looking to expand, and many have closed, leaving the city with swaths of empty stores. The supply of space is surging in most areas, with availability rates in key districts such as Fifth Avenue, Soho and Meatpacking at 24% or higher, according to Cushman. Madison Avenue, from 57th to 72nd streets, had the highest availability rate for the second straight quarter, reaching almost 40% at the end of the year.