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New York Attorney General Letitia James sued the New York Sports Club and Lucille Roberts gym chains for charging dues to members for facilities that remain closed due to the coronavirus pandemic and failing to honor cancellation requests, Bloomberg News reported. James filed suit yesterday in state court in Manhattan against Town Sports International Holdings Inc., which owns both chains. The attorney general is seeking a court order blocking the company for charging for shuttered facilities or canceled memberships. The gym chains came under fire from James earlier this year for charging April dues despite being shut down by Governor Andrew Cuomo in March. They agreed to stop billing members while they were closed, give credits to those who were charged and allow customers to cancel their memberships. But James said they resumed charging members Sept. 1 even though some gyms remain closed. They have also not offered the promised credits for the dues that were charged in March and April, according to the New York suit. Town Sports filed for chapter 11 bankruptcy protection earlier this month, saying that it was unable to keep up with debt payments after it was forced to shut its gyms for months. The company is seeking to close certain locations permanently, depending on the outcome of talks with landlords, and has support from its lenders to pursue a sale of its business. 

Lonestar Resources US Inc. filed for chapter 11 protection yesterday, becoming the latest energy company to succumb to high debt, lagging crude prices and dismal fuel demand due to the COVID-19 pandemic, Reuters reported. The company’s assets and liabilities were in the range of $500 million to $1 billion, according to a court filing in the U.S. Bankruptcy Court for the Southern District of Texas. The Texas-based shale driller had announced a restructuring support agreement in September with its largest shareholders to eliminate about $390 million in debt obligations and preferred equity interests. The new coronavirus-led lockdowns, which decimated travel and fuel demand, have forced many shale producers to halt oil drilling, leaving them with no source of cash to repay their massive debts.

The Treasury Department said yesterday that it would begin forgiving loans granted to small-business owners under the Paycheck Protection Program, following banks’ and borrowers’ complaints that the process had been bogged down, the Wall Street Journal reported. The government expects to approve and pay forgiveness requests by late this week or early next, a Treasury spokesperson said. The applications are generally expected to be approved quickly, with the exception of loans above $2 million that will get added scrutiny. Business advocates, banks and lawmakers have raised concerns that the process of turning the loans into grants is too complex and slow under the $670 billion federal program, designed to help small businesses respond to the economic fallout of the pandemic with forgivable government-backed loans distributed through banks. Since it launched an online portal for loan forgiveness in early August, the Small Business Administration has received more than 96,000 applications from businesses seeking to have their loans forgiven — but none had been approved, William Manger, SBA’s chief of staff and associate administrator, told House lawmakers last week.

Though the biggest U.S. companies may be going bust at a slower pace, smaller firms are bumping bankruptcy filings back to levels seen during the summer months, according to Epiq AACER, Bloomberg News reported. About 620 companies in the U.S. filed for chapter 11 protection this month through Sept. 25, a 48 percent increase over the same period last year, according to the legal services provider. June and July saw 609 and 644 filings this year, respectively. Large U.S. companies have been helped by abundant liquidity after intervention by the Federal Reserve. Smaller firms were shut out, leaving them more exposed to bankruptcy as government support programs expired with little progress on fresh stimulus in Congress. “We will continue to see filings for companies that had been the most disrupted by Covid and are operating in a zero revenue environment,” said Deirdre O’Connor, managing director of corporate restructuring at Epiq.

Retail bankruptcies, liquidations and store closings in the U.S. reached records in the first half of 2020 as the COVID-19 pandemic accelerated industry changes, particularly the shift to online shopping, the Wall Street Journal reported. In the first six months, 18 retailers filed for chapter 11 protection, mostly concentrated in apparel and footwear, home furnishings, grocery and department stores, according to the report by professional-services firm BDO USA LLP. They include department-store operators Neiman Marcus Group Ltd., J.C. Penney Co. and Stage Stores Inc., home-goods retailers Pier 1 Imports Inc. and Tuesday Morning Corp. and vitamin seller GNC Holdings Inc. From July through mid-August, 11 more retailers filed, including apparel retailers Lucky Brand Dungarees LLC, Brooks Brothers Inc., Ann Taylor parent Ascena Retail Group Inc., Stein Mart Inc., and Men’s Wearhouse and Jos. A. Bank parent Tailored Brands Inc. This year is on pace to rival 2010, when 48 retailers filed for bankruptcy in the wake of the 2007-09 recession, BDO said. Retail bankruptcies in 2020 have already surpassed the 22 such filings recorded last year.

The pandemic has battered New York City businesses, with almost 6,000 closures, a jump of about 40 percent in bankruptcy filings across the region and shuttered storefronts in the business districts of all five boroughs, Bloomberg News reported. “By late fall, there will be an avalanche of bankruptcies,” said bankruptcy lawyer Al Togut. “When the cold weather comes, that’s when we’ll start to see a surge in bankruptcies in New York City.” Already, dwindling tax revenue has led to cutbacks in municipal services. Trash on sidewalks, unkempt parks and an increase in shootings have made it more difficult to persuade workers to return to offices, more than 150 executives told the mayor in a letter this month. “It’s a crisis, and we need to act — our economy can’t recover without saving small businesses,” said city Comptroller Scott Stringer, a candidate in next year’s mayoral election. The pandemic could permanently close as many as a third of New York’s 230,000 businesses, according to the Partnership for New York City, a business group. “Retail and real estate will continue to decline in New York until you can reignite the office traffic,” said Joseph Malfitano. Many New York City business owners who give up don’t even bother filing for bankruptcy, which can cost as much as $25,000, according to bankruptcy attorney Leslie Berkoff. Owners just lock the doors and walk away. “Nobody’s going to chase you right now,” said Berkoff. “A lot of your vendors probably aren’t going to survive either.” Almost 6,000 New York City businesses closed from March 1 to Sept. 11, according to Yelp, the website of user reviews. Over 4,000 of those closed permanently.

The U.S. Treasury said yesterday that it had closed loans to seven large airlines hit hard by the coronavirus pandemic and urged Congress to save tens of thousands of airline jobs by extending billions in payroll assistance, Reuters reported. The Treasury said in a statement the seven carriers were Alaska Airlines, American Airlines, Frontier Airlines, JetBlue Airways Corp, Hawaiian Airlines, SkyWest Airlines and United Airlines. Airlines and unions were still heavily lobbying Congress ahead of a deadline today for a new $25 billion bailout to keep workers on the payroll for another six months, but industry officials acknowledge they face an uphill battle with just hours left. U.S. airlines received $25 billion in March under the CARES Act, primarily in the form of grants to keep employees on payroll through September and avoid furloughs. Treasury Secretary Steven Mnuchin urged Congress on Tuesday to extend the payroll assistance program “so we can continue to support aviation industry workers as our economy reopens and we continue on the path to recovery.” Last week, Mnuchin ruled out executive action to avert airline layoffs. House of Representatives Democrats have backed a $2.2 trillion measure that would provide assistance to many hard-hit sectors as well as direct relief for Americans. They have been reluctant to support a stand-alone measure that would only aid airline workers.

Oasis Petroleum Inc. filed for chapter 11 protection today, the latest U.S. shale producer to seek court-aided restructuring as the energy industry reels from an unprecedented crash in oil prices caused by the COVID-19 pandemic, Reuters reported. The company listed assets and liabilities in the range of $1 billion to $10 billion, according to a court filing. Oasis said it secured $450 million in debtor-in-possession financing and expects to cut debt by $1.8 billion through the restructuring. It had long-term debt of $2.76 billion with just $77.4 million in cash and cash equivalents as of June 30. Oasis said upstream operations and production would continue normally as restructuring happens, adding that its independent pipeline company Oasis Midstream Partners LP and other subsidiaries in which it owns an equity interest are not included in chapter 11 proceedings. 

New York Gov. Andrew M. Cuomo (D) on Monday announced he will extend the eviction moratorium — set to expire Oct. 1 — to next year, continuing protections for tenants as well as homeowners who have been unable to pay rent and mortgage during the public health crisis, the (Albany) Times Union reported. Cuomo said that he will sign an executive order extending the eviction moratorium, known as the Tenant Safe Harbor Act, to Jan. 1. It also protects homeowners from foreclosure for nonpayment of mortgages during the coronavirus pandemic. The extended protection builds on an extension Cuomo approved recently to protect commercial tenants and property owners from eviction or foreclosure. Protection for commercial property owners and tenants extends to Oct. 20.