%1

Commercial chapter 11 filings increased 46 percent in November 2020 over November of last year, according to data provided by Epiq. Increasing from November 2019’s commercial chapter 11 filing total of 449, nearly half of the 654 commercial chapter 11 filings registered in November 2020 were “related” filings. All other filing categories registered decreases from last year. The 34,478 total U.S. bankruptcies in November 2020 were down 39 percent from the 56,085 filings in November 2019. Consumer bankruptcies also decreased 39 percent in November 2020, as the 32,143 filings dropped from the 53,063 consumer filings registered in November 2019. Commercial bankruptcy filings totaled 2,335 in November 2020, a 23 percent decrease from the 3,022 commercial filings in November 2019.

A bipartisan group of U.S. senators will unveil legislation as early as today for additional fiscal stimulus worth about $908 billion, in an effort to speed up aid to an economy at risk of a further dip due to a record spike in coronavirus cases, the Financial Times reported. But Mark Warner, one of the Democratic senators leading the ten-strong bipartisan group pushing for the relief money, acknowledged that the effort was taking fire from both sides of the aisle over their proposal for a four-month emergency package. “We may have to go through a few more days of drama,” Sen Warner told CNN on Sunday. He added that it remained unclear whether Republican Senate majority leader Mitch McConnell would permit the legislation to go forward for a vote, despite expressing positive sentiments about the effort. The proposal includes $288 billion in small business aid, $180 billion in unemployment benefits that would boost weekly payouts by $300 and $160 billion for cash-strapped state and local governments. It would also offer aid to troubled sectors, including $17 billion for the airline industry. One sticking point remains whether to accord liability protection for businesses that reopened during the pandemic. Read more. 

House Speaker Nancy Pelosi (D-Calif.) said on Friday that she wants to attach a coronavirus relief bill to a $1.4 trillion omnibus spending package that would avert a government shutdown later this month, raising the prospects of long-stalled stimulus relief finally being signed into law, Politico reported. Pelosi said that Senate Majority Leader Mitch McConnell agreed with her about combining the annual spending measures with coronavirus relief during their conversation on Thursday, the first time in weeks the two leaders have discussed moving a relief bill. President-elect Joe Biden on Friday said that he’s “encouraged” by the $908 billion proposal, framing it as the type of bipartisan work that he hopes to foster as president. He cautioned that “any package passed in the lame duck session is not going to be enough overall.” But hurdles remain. Government funding runs out in just one week, and there are still a sizable number of issues impeding an agreement on a massive spending package that would increase agency budgets for the rest of the fiscal year. Read more.

The Trump administration on Friday suspended all federal student loan payments through the end of January and kept interest rates at 0 percent, extending a moratorium that started early in the pandemic but was set to expire at the end of this month, the Associated Press reported. By extending payments by one month, the administration is effectively leaving it to the Biden administration or Congress to decide whether to provide longer-term relief to millions of student borrowers. The measure was included in a March relief package and the White House extended it in August, but its fate was in doubt amid stalemate over a new relief bill. In announcing the extension, Education Secretary Betsy DeVos rebuked Congress for failing to act. “The added time also allows Congress to do its job and determine what measures it believes are necessary and appropriate,” DeVos said in a statement. “The Congress, not the Executive Branch, is in charge of student loan policy.” Under the measure, students will not be required to make payments, their loans will not accrue interest and all collection activity will halt until the end of January. Last month, the American Council on Education and dozens of other higher education associations urged DeVos to extend the relief, saying that the recent surge in COVID-19 cases would likely lead to even more economic turmoil. President-elect Joe Biden has not directly addressed the moratorium but on Tuesday called for immediate relief including “relief from rent and student loans.” He has also supported proposals to erase up to $10,000 in student debt for all borrowers as part of a future virus relief package.

Some creditors of Guitar Center Inc. have organized with the intent to vote against the retailer’s bankruptcy plan ahead of a critical deadline next week, Bloomberg News reported. Certain first-lien noteholders have signed a cooperation agreement and are raising questions about the legitimacy of a previous Guitar Center refinancing. Their concerns center on new super-senior notes previously offered by Guitar Center to pay off existing obligations and avert a default by the largest U.S. retailer of music instruments and equipment. The deal gave the new notes priority on certain collateral that was already pledged to existing first-lien notes. The dissident holders are evaluating whether the new pledge was allowed under existing debt documents, arguing that Guitar Center needed consent from each first-lien noteholder, rather than the simple majority that approved the transaction. They also object to being left out of participating in the new notes and the retailer’s bankruptcy loan. The creditor group represents about 20 percent of Guitar Center’s first-lien notes outstanding. They’re pushing back on a restructuring plan that was already supported by holders of more than 70 percent of the notes, according to Guitar Center’s disclosures.

Randy Levine, president of the New York Yankees and former deputy mayor of New York City, said Sunday that the coronavirus pandemic has left a “bleak” financial situation in the city, suggesting that the city “will go bankrupt” if the issue is not addressed, The Hill reported. “Because of the pandemic, because of what’s happened here, the fiscal situation in the city is really, really bleak. It hasn’t gotten the attention that it deserves,” Levine said during an interview with John Catsimatidis on his radio show on WABC 770 AM. “If this city is not on good financial footing, then nothing else can happen,” said Levine, who served as the deputy mayor for economic development, planning and administration from 1997 to 2000. “If you don’t solve this problem, then nothing happens,” he added. “The city will go bankrupt.” State and city governments across the United States have exhausted their coffers since the start of the pandemic, using money to provide protective equipment and gear up for other preventative measures as the virus spread. The New York Times reported in November that New York City itself spent $5.2 billion combatting the pandemic, including paying for ventilators, food assistance, testing and reopening schools safely. Mayor Bill de Blasio (D) warned at the time that if the city did not receive additional resources from a major federal stimulus package, that New York would be forced to make "extremely difficult choices", referring to cuts to municipal jobs. The mayor reported a $4 billion budget gap as a result of increased spending due to the pandemic, according to the Times. Levine said that while other issues may exist in the city, such as homelessness and crime, he argued that economic policy should be the foundation to solving any wider socioeconomic issue exacerbated by the pandemic.

Arandell Holdings Inc. said it finalized an agreement that calls for private equity firm Saothair Capital Partners to invest in the business, clearing the way for the Menomonee Falls commercial printer to emerge from chapter 11, the Milwaukee Business Journal reported. Arandell said Friday that the agreement was approved via U.S. Bankruptcy Court in Delaware for the proposed transaction that had been disclosed in a Sept. 30 bankruptcy court filing. Under the agreement, an affiliate of Saothair, which is based in the Philadelphia area, will become the controlling shareholder of Arandell’s business and assets. The business will retain the same executives and will continue operations at its current location. Arandell said that it will exit bankruptcy “strongly capitalized with a conservative balance sheet.” The company filed for financial reorganization under chapter 11 in August citing industry changes resulting from the COVID-19 pandemic. Arandell said that it has maintained normal operations, preserved more than 500 jobs and increased overall revenue growth.

Senate Majority Leader Mitch McConnell (R-Ky.) and House Speaker Nancy Pelosi (D-Calif.) spoke yesterday amid growing momentum for a targeted coronavirus relief deal, the Washington Post reported. They also discussed reaching a deal on a spending bill to avert a government shutdown on Dec. 11. Their talks — the first since the Nov. 3 election — came shortly after a growing number of lawmakers have rallied behind a $908 billion bipartisan spending bill that would aim to buttress parts of the economy over the next several months. While some of these lawmakers stopped short of endorsing every part of the proposal, many said the offer was solid enough that it should be used as the basis for negotiations, a sentiment that Pelosi and Senate Minority Leader Charles E. Schumer (D-N.Y.) expressed Wednesday. Sens. Joni Ernst (R-Iowa), Charles E. Grassley (R-Iowa), Lindsey O. Graham (R-S.C.), John Cornyn (R-Tex.) and Kevin Cramer (R-N.D.) signaled their openness to the package, which had been unveiled by a group of moderate Republican and Democratic senators on Tuesday. The measure is more than what Senate Republicans had originally offered and less than what House Democrats had wanted, but it is designed to try to provide immediate relief to some parts of the economy as the pandemic enters a dangerous and increasingly deadly phase. Graham said he’s “never been more hopeful that we’ll get a bill … the $908 billion bill, that’s the one I support.” He said he had talked to President Trump about the measure “extensively.”

Lighthouse Resources Inc., a coal company with mines in Wyoming and Montana, and White Stallion Energy LLC, a miner that operates in Indiana and Illinois, both filed for bankruptcy after the Covid-19 pandemic dropped coal prices, Bloomberg News reported. Coal companies have struggled amid an increase in natural gas and renewable energy, and U.S. coal production in the second quarter of this year was the lowest it has been in almost 50 years, according to bankruptcy court filings. Coal has been hit hard this year because of the decrease in demand for electricity to run offices, factories and stores. That’s been true all over the world, and in the U.S., coal power plants have been the first place that utilities have cut back when they need less electricity. Peabody Energy Corp., the biggest U.S. coal producer, warned last month that it’s facing the same issues and that it may seek bankruptcy protection for the second time in five years if the market doesn’t improve. Lighthouse has debt of about $456 million, according to its declaration. White Stallion, which is majority owned by American Patriot Energy LLC, listed about $104 million of debt, according to its declaration. “In light of the challenging market conditions and other impacts on our business from COVID-19, we have been required to reduce costs and reorganize our business resulting in the reduction of our workforce in Montana,” Lighthouse Chief Executive Officer Everett King said in a news release. Lighthouse’s bankruptcy was prompted by decreased prices in Asia connected to the COVID-19 global pandemic and the fact that the cost to produce coal from its Decker Mine in Montana exceeds the sale price in its contract with an electric company. White Stallion suffered a net loss of about $30 million in 2019. In the months before its bankruptcy its financial situation worsened due to the decline in coal consumption at power generation facilities caused by the economic slowdown resulting from COVID-19, according to the bankruptcy declaration. The company expects that all its mines will remain idled during the bankruptcy process.