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Total U.S. bankruptcy filings in October decreased 41 percent from last year, according to data provided by Epiq Systems, Inc. The 40,209 total filings in October 2020 were down from the 67,858 filings registered in October 2019. The 37,688 consumer filings in October 2020 also represented a 41 percent decrease from last year’s consumer total of 64,279. Overall commercial filings in October 2020 totaled 2,521 filings, down 30 percent from the 3,579 filings in October 2019. Commercial chapter 11 filings increased slightly as the 550 filings in October 2020 were up 4 percent over the 530 recorded in October 2019. Throughout 2020, more than one-half of the commercial chapter 11 filings have been related filings by subsidiaries within a corporate group.

Bankruptcy gives over 700,000 debtors a fresh start every year, but student loan debts don’t go away as easily, according to a New York Times report. For decades, politicians have slowly made them harder to discharge, while differing standards in courts across the country mean a debtor’s chances can depend on where he or she lives. The few debtors who attempt it are subjected to a morality play unlike anything else in the world of personal finance: so-called adversary proceedings, where they must lay themselves bare in court as opposing lawyers question how much they pay for lunch or give to their church. More than 43 million borrowers hold over $1.6 trillion in student loans, a sum that has more than tripled in 13 years. It exceeds what Americans owe on credit cards or auto loans and trails only mortgages. Sixty-two percent of students who graduated from nonprofit colleges in 2019 had student loan debt, according to an Institute for College Access & Success analysis. Their average balance was $28,950 — not including borrowing by their parents. Many struggle mightily to pay: Before the government’s coronavirus relief efforts paused federal student loan payments, 7.7 million borrowers were in default and nearly two million others were seriously behind.

The federal government is swamped with reports of potential fraud in the Paycheck Protection Program, according to government officials and public data, casting a shadow on one of the federal government’s signature responses to the coronavirus pandemic, the Wall Street Journal reported. Congress and the Trump administration designed the PPP to give small businesses fast and easy access to taxpayer funds, and it worked: About $525 billion in loans were distributed to 5.2 million companies between April 3 and Aug. 8. Many business owners say it was a lifeline in turbulent times. But evidence is growing that many others took advantage of the program’s open-door design. Banks and the government allowed companies to self-certify that they needed the funds, with little vetting. The Small Business Administration’s inspector general, an arm of the agency that administers the PPP, said last month there were “strong indicators of widespread potential abuse and fraud in the PPP.” The watchdog counted tens of thousands of companies that received PPP loans for which they appear to have been ineligible, such as corporations created after the pandemic began, businesses that exceeded workforce size limits (generally 500 employees or fewer) or those listed in a federal “Do Not Pay” database because they already owe money to taxpayers. Tens of thousands of organizations also appear to have received more money than they should have based on their headcounts and compensation rates, it said.

Dealmakers said that Joe Biden’s projected win of the U.S. presidency and the Republican Party potentially retaining control of the U.S. Senate could drive a pickup in mergers and acquisitions (M&A) that took a hit amid the COVID-19 pandemic, Reuters reported. Bankers and lawyers who advise companies on M&A said the outcome, if confirmed, was the best possible for providing the stable economic and regulatory environment that dealmaking needs. They expect that Biden, the Democratic Party candidate, would be more predictable in governing than Republican President Donald Trump, and that a Republican-controlled U.S. Senate would restrain Biden’s most interventionist policies. "This dynamic can be quite conducive to doing deals, because it provides stability," said Peter Orszag, who served in the White House under President Barack Obama and now heads the financial advisory arm of investment bank Lazard Ltd. “The only caveat is that there is less chance of another big round of stimulus, which would help the macroeconomic outlook, than if Democrats had taken the Senate,” Orszag added. All major U.S. TV networks projected Biden would win the presidency on Saturday, though Trump vowed to continue to challenge the outcome in the courts. Two runoff U.S. Senate races in Georgia, which will decide which party will control the upper chamber of Congress, will take place on Jan. 5, with Republicans favored to retain control based on this week’s tally. 

U.S. Senate Majority Leader Mitch McConnell (R-Ky.) said on Friday that economic statistics, including a 1 percentage point drop in the unemployment rate, showed that Congress should enact a smaller coronavirus stimulus package that is highly targeted at the pandemic’s effects, Reuters reported. McConnell told a news conference in Kentucky that the fall to a 6.9 percent jobless rate, combined with recent evidence of overall economic growth, showed the U.S. economy is experiencing a dramatic recovery. “I think it reinforces the argument that I’ve been making for the last few months, that something smaller — rather than throwing another $3 trillion at this issue — is more appropriate,” McConnell told reporters. But his call for a narrow package was quickly rejected by House of Representatives Speaker Nancy Pelosi, a Democrat, who has been working to broker a COVID-19 stimulus deal near the $2 trillion mark with Treasury Secretary Steven Mnuchin. Senate Republicans, who oppose a larger package, have twice failed to move forward with smaller legislation worth $500 billion due to Democratic opposition. Pelosi insisted that any agreement must include effective support for testing, tracing and vaccine development, as well as aid to state and local governments. Trump and his Republican allies have balked at Democratic demands for state and local aid, calling it a bailout for Democratic-run states and cities.

The due date is quickly approaching for Nevadans who have racked up thousands of dollars in missed rent payments and other debts. For many, easing the financial burden will mean filing for bankruptcy, and experts predict a wave of filings after the new year, when the remaining relief from March’s federal $2 trillion stimulus package known as the CARES Act expires, the Las Vegas Review-Journal reported. An influx of bankruptcies normally corresponds to an increasing unemployment rate, and a coronavirus- fueled recession and a skyrocketing number of jobless workers would cause more filings. But in an unexpected twist, the number of people filing for personal bankruptcy such as chapter 7 and chapter 13 has dropped significantly since mid-March, according to a September study from Harvard Business School. Sullivan Hill Managing Attorney Elizabeth Stephens said that the CARES Act is why consumer bankruptcies are down including in Las Vegas. “(It) poured $2.2 trillion into the economy,” she said, adding she expects to see “a torrent of bankruptcy filings” after CARES Act protections like additional unemployment benefits and other federal provisions such as the federal eviction moratorium expire Dec. 31. Stephens also pointed to an increase of commercial chapter 11 bankruptcies as a key indicator of what is to come for consumer filings. “Generally, business bankruptcies precede consumer bankruptcies,” she said. ABI reported last month chapter 11 filings increased nationally by 33 percent during the first nine months of this year to 5,529 compared with the same period in 2019. The Federal Reserve Bank of San Francisco also released a study last month saying, “Chapter 11 bankruptcy filings are running at their fastest pace since 2013. The number of companies that have defaulted on their debt so far this year has surpassed the total for all of 2019 and is on course to be the highest since 2009.”

The Pension Benefit Guaranty Corp. officials said Friday that the PBGC is taking over J.C. Penney Co.'s defined benefit plan, Pensions&Investments reported. PBGC Director Gordon Hartogensis said in a statement that the agency "is acting to protect the retirement security of the J.C. Penney plan participants." The company and 17 related entities filed for chapter 11 protection in U.S. Bankruptcy Court in Corpus Christi, Texas, on May 15. In October, the company announced that it was seeking court approval of a proposal to sell its operating assets to a joint venture led by Brookfield Asset Management and Simon Property Group that did not agree to assume the pension plan. According to PBGC estimates, the J.C. Penney Corporation Inc. Pension Plan is 92% funded with $3.3 billion in assets and $3.6 billion in benefit liabilities. According to the company’s 10-K filing in January, the pension plan had $3.5 billion in assets and $3.2 billion in liabilities, and was 120 percent funded. The termination is effective Friday and further updates are expected.

NPC International Inc., the nation’s largest franchisee of Wendy’s and Pizza Hut restaurants, has a deal to sell itself out of bankruptcy to Flynn Restaurant Group LLC, WSJ Pro Bankruptcy reported. Flynn, the largest restaurant franchise operator in the U.S., is offering $816 million to buy the more than 1,300 restaurants operated by NPC. Weighed down by nearly $900 million in debt, NPC filed for chapter 11 protection in July and has been marketing assets. The stalking-horse offer could be subject to higher and better offers and requires bankruptcy court approval. It is likely to face competition from other interested buyers, including possibly Wendy’s Co. itself. Wendy’s said on Nov. 2 that it was considering making an offer for nearly 400 Wendy’s restaurants operated by NPC as part of a consortium with other Wendy’s franchises. Both Wendy’s and Pizza Hut LLC have expressed concerns about NPC’s quick timeline for a sale, and have pushed for greater involvement in vetting who will be the new owner of NPC’s restaurants. Wendy’s has signaled it would oppose a sale to Flynn, which operates Arby’s and Panera Bread restaurants that also sell sandwiches. Wendy’s has traditionally preferred franchisees that only own its restaurants, and Arby’s could be viewed as a direct competitor in the burger business. In addition to the Wendy’s restaurants, NPC operates roughly 900 Pizza Huts.

The U.S. economy created the fewest jobs in five months in October and more Americans are working part time, underscoring the challenges the next president faces to keep the recovery from the pandemic on track as fiscal stimulus dries up and new COVID-19 cases increase across the country, Reuters reported. The Labor Department’s closely watched employment report on Friday also showed 3.6 million people out of work for more than six months. Nonfarm payrolls increased by 638,000 jobs last month after rising by 672,000 in September. That was the smallest gain since the jobs recovery started in May and left employment 10.1 million below its peak in February. Employment was held back by the departure of 147,000 temporary workers hired for the 2020 Census. A 271,000 increase in leisure and hospitality jobs accounted for about two-fifths of the payrolls gain last month. Employment in professional and business services increased by 208,000, with about half in temporary help services. Manufacturing added 38,000 jobs, while construction payrolls increased 84,000. 

The Federal Reserve has doled out billions of dollars in emergency loans to keep the economy afloat during a crippling pandemic, garnering broad bipartisan praise, Politico reported. Now, the lawmaker who is likely to head the powerful Senate Banking Committee if Republicans keep control of the Senate is signaling that the Fed should stop. “If someone wants to make the case that we need the government to give money to people or businesses because they’re struggling, by all means you can make that case,” said Sen. Pat Toomey (R-Pa.). “But that’s not a Fed exercise.” Toomey believes that the central bank’s emergency programs — which he called “wildly successful” — should wind down at the end of the year, a spokesperson confirmed. He’s concerned that if the programs are extended, they will be seen as a substitute for fiscal policy, the tax and spending decisions that are the responsibility of Congress and the president. While the Fed is an independent agency whose board makes its own policy decisions, it is overseen by the Banking Committee and is sensitive to its views.