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Wendy’s Co. disclosed yesterday that it has submitted a bid to buy nearly 400 restaurants under its own name and operated by bankrupt franchisee NPC Quality Burgers Inc., Reuters reported. NPC filed for bankruptcy protection in July and started a process to sell its assets, including its interests in Wendy’s restaurants across eight different markets. Wendy's said that it remains committed to maintaining its ownership level at about 5 percent of the total Wendy's system. The burger chain expects several existing and new franchisees, part of the consortium bid, to buy most of the NPC markets, with Wendy's buying one or two at most. Wendy’s did not disclose the size of the consortium bid. NPC Quality Burgers’ parent, NPC International Inc, earlier this month said restaurant franchisee Flynn Restaurant Group LP had agreed to buy all of its more than 1,300 Pizza Hut and Wendy’s restaurants. Wendy’s filed an objection last week to the sale of NPC International’s assets to Flynn, saying the bidder also operates a few of its competitors’ restaurants.

Regal Entertainment Group owner Cineworld Group PLC is in talks with investors for financial lifelines after months of empty theaters in the U.S. and U.K. during the coronavirus pandemic, WSJ Pro Bankruptcy reported. One proposal under consideration would supply rescue financing to help Cineworld avoid filing for protection from creditors. Under an alternate proposal, investors would provide a loan to finance an insolvency proceeding, the British equivalent of bankruptcy. The Financial Times had earlier reported that Cineworld was considering a filing under Britain’s equivalent of chapter 11. Based in the U.K., Cineworld is the second-largest movie-theater operator on a global basis as well as in the U.S., after AMC Entertainment Holdings Inc. Cineworld didn’t respond to requests for comment. Cineworld last month closed all of its more than 500 U.S. locations after reopening in August. The company also suspended operations at its 127 locations in the U.K. The company had said in September it had commenced discussions with its lenders and had taken actions to improve its liquidity. The company also reported that revenue for the first half of 2020 was down 67 percent, to $712 million. Cineworld has over $4 billion of total debt, as well as more than $4 billion of lease obligations.

From Boeing, Carnival and Delta Air Lines to Exxon Mobil and Macy's, many of the nation's most iconic companies aren't earning enough to cover their interest expenses (a key criterion, as most market experts define it, for zombie status), Bloomberg News reported. Almost 200 corporations have joined the ranks of so-called zombie firms since the onset of the pandemic, according to a Bloomberg analysis of financial data from 3,000 of the country's largest publicly traded companies. In fact, zombies now account for nearly 20 percent of those firms. Even more stark, they've added almost $1 trillion of debt to their balance sheets in the span, bringing total obligations to $1.36 trillion. That's more than double the roughly $500 billion zombie companies owed at the peak of the financial crisis. The consequences for America's economic recovery are profound. The Federal Reserve's effort to stave off a rash of bankruptcies by purchasing corporate bonds might very well have prevented another depression. But in helping hundreds of ailing companies gain virtually unfettered access to credit markets, policymakers may inadvertently be directing the flow of capital to unproductive firms, depressing employment and growth for years to come, according to economists.

The chief executives of the seven largest U.S. airlines made a fresh plea for more payroll relief before the end of the year and pointed to the challenges of distributing a COVID-19 vaccine in a letter to Congressional leaders yesterday, Reuters reported. The letter, seen by Reuters, was sent by the main industry lobby Airlines for America and signed by the heads of the top seven U.S. airlines. “As the nation looks forward and takes on the logistical challenges of distributing a vaccine, it will be important to ensure there are sufficient certified employees and planes in service necessary for adequate capacity to complete the task,” they said. U.S. airlines received $25 billion in federal aid to keep employees on payroll between March and September and have asked for a second round of support after cutting tens of thousands of jobs either through furloughs or early retirements in recent months. They have argued that they need trained employees to help service an economic rebound, with the prospects of a vaccine in the coming months underscoring the urgency. The number of travelers that passed through Transportation Security Administration checkpoints on Tuesday was down two-thirds from the same day in 2019, an improvement from the start of the pandemic but not enough to bring airlines out of their cash hole, particularly with further lockdowns looming as COVID-19 cases rise. Still, the industry’s aid request has received wide bipartisan support but has so far failed to pass as Congress remains deadlocked over a broader COVID-19 relief and stimulus plan. Read more. 

In related news, JPMorgan Chase & Co. Chief Executive Jamie Dimon said yesterday that U.S. politicians are behaving like children by not passing a new stimulus bill that could help Americans whose income has been wiped out by the coronavirus pandemic, Reuters reported. “This is childish behavior on the part of our politicians,” Dimon said about an impasse between Democrats and Republicans over how much additional spending should be authorized. The two parties should split the difference between the amounts they want to devote to coronavirus relief, he said. “Just get it done,” he said, declining to blame one side over the other. The issue came up again in Congress on Wednesday, as U.S. Senate Democratic leader Chuck Schumer said he and House of Representatives Speaker Nancy Pelosi had formally invited Senate Majority Leader Mitch McConnell and other Senate Republicans to bipartisan talks on relief legislation. Earlier in the day, McConnell said Congress should aim for agreement on items where there is little disagreement. But he blamed Democrats for blocking earlier Senate Republican efforts to approve spending packages of $500 billion, which Democrats have called inadequate. Read more.

Unsecured creditors of Rubio’s Restaurants Inc. said that the bankrupt fish taco chain and key lender Golub Capital LLC took actions to manufacture a cash crunch and loot the company, WSJ Pro Bankruptcy reported. A committee of unsecured creditors filed papers in the U.S. Bankruptcy Court in Wilmington, Del., on Tuesday objecting to Rubio’s request for financing designed to carry the Carlsbad, Calif.-based company through the chapter 11 proceedings. In the filing, the committee said that in many so-called prepackaged bankruptcies, junior creditors recoup much of what they are owed. In Rubio’s case, however, they are threatened with little or no recoveries. Rubio’s and Golub developed a strategy that would essentially loot assets that previously weren’t used as collateral, the committee said, leaving nothing for unsecured creditors. Golub Capital, Rubio’s top secured lender, owns a stake in the company in addition to $72 million in debt. Under the company’s restructuring proposal, Golub agreed to provide bankruptcy financing while swapping some secured debt into equity.

Landlords wrongfully acted to evict metro Phoenix renters during the height of the COVID-19 pandemic, despite a federal law protecting tenants from losing their homes if they couldn't pay rent, USA Today reported. More than 900 evictions were filed against tenants who likely should have been protected by the federal CARES Act, according to an investigation by the Arizona Republic, part of the USA TODAY Network. Most of those renters also were wrongfully charged hundreds of dollars in late and legal fees. Many had no lawyer to help them navigate the eviction process, no one to tell them about legal protections and nowhere to go when they were locked out of their homes. The CARES Act, passed by Congress on March 26 to provide fast economic help to people hurt by the pandemic, stated landlords with federally backed mortgages couldn’t evict tenants before July 26 for not paying rent. Nearly half of the nation's mortgages are federally backed. Tenants living in apartments, condominiums or rental homes with federally backed mortgages didn't have to prove they were impacted by COVID-19. Under the CARES Act, they were automatically protected from eviction for not paying rent. An Arizona Republic investigation into the more than 8,000 evictions filed in Maricopa County, Arizona's most populous county and home to Phoenix, during that period found more than 10 percent appeared to violate the CARES Act. Not all of those 900-plus tenants were kicked out. Some paid their rent in time to stop the evictions, even though they weren’t required to, and others had their cases dismissed for unknown reasons. However, the CARES Act should have stopped landlords from even starting the eviction process in court.

New York City’s public school shutdown and the prospect of a crippled mass transit agency brings a new sense of vulnerability to a city that had been making a comeback from its dark days as the world’s COVID-19 epicenter, Bloomberg News reported. New York Governor Andrew Cuomo said that the city’s rising test rate could force indoor dining, gyms and other “high-risk” nonessential businesses to close. The moves threaten the city’s economy just as it was showing signs of improvement. Before COVID-19 struck, the city’s unemployment rate was 3.4 percent. New York, the early center of the U.S. outbreak, saw the rate touch a high of 20.3 percent in June. By September, with the reopening of schools and many businesses, it had partly recovered to 14.1 percent. Shares of real estate firms, lenders and other New York City-linked companies accelerated declines after Mayor Bill de Blasio’s schools announcement. It comes as Wall Street’s biggest banks may scale back their workforce in 2021: Goldman Sachs Group Inc. plans to cut its headcount for the second time in just three months. For the parents of hundreds of thousands of students, the crisis was immediate: They must find alternative child-care arrangements or adjust their work schedules by today, after the mayor said the city had reached a 3 percent positivity rate that triggered the halt of at least two weeks to in-class instruction. Workers also face the prospect of longer commutes, after New York’s Metropolitan Transportation Authority said it will have to slash subways and buses by 40 percent and chop commuter rail service by half if aid doesn’t come from the government.

Norwegian Air said yesterday that it has asked an Irish court to oversee a restructuring of its massive debt as it seeks to stave off collapse amid the coronavirus pandemic, Reuters reported. Norway’s government last week rejected the airline’s plea for another injection of state funds, and the company said the following day it was at risk of having to halt operations in early 2021 unless it got access to more cash. “The main purpose here is to come out of this process quite shortly with a company that is ‘investable’, where we can be attractive again for investors,” Chief Financial Officer Geir Karlsen told Reuters. The company has opted for an Irish process since its aircraft assets are held in Ireland. After growing rapidly to become Europe’s third-largest low-cost airline and the biggest foreign carrier serving New York and other major U.S. cities, Norwegian’s debt and liabilities stood at 66.8 billion crowns ($7.4 billion) at the end of September. Read more. 

With the COVID-19 pandemic grinding international travel to a halt, experts on an online panel today at ABI’s International Insolvency Forum will provide their insights into distressed non-U.S. airlines filing for chapter 11 protection, and how their cases may differ from domestic carriers. Click here to register.