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Bank analysts say that President Donald Trump’s bid to quickly fill the U.S. Supreme Court vacancy left by Friday’s death of liberal Justice Ruth Bader Ginsburg could end the already remote chance of a pandemic relief package before the Nov. 3 election, Reuters reported. In the meantime, the vacancy is adding uncertainty in an already uncertain environment, a top Fed official told Reuters. “The Supreme Court vacancy is likely to motivate the political base of both parties and will displace the coronavirus and geopolitical tensions with China as a dominant topic in voters’ minds,” UBS economists wrote in a note over the weekend. Federal Reserve Chair Jerome Powell is expected to tell lawmakers at three separate hearings on Capitol Hill this week that a new fiscal package is critical to the economy’s recovery. Wall Street’s main indices hit their lowest in nearly seven weeks yesterday, on fresh concerns a package could be delayed. Republicans and Democrats in Congress, already deadlocked over a stimulus package, are now focused on the fight over the Supreme Court vacancy, making a package less likely to pass, analysts at TD Securities wrote in a note yesterday. 

Federal Reserve Chairman Jerome Powell said the economic response to the coronavirus alleviated the fallout from the pandemic-induced recession but suggested Congress would likely need to spend more money to shore up parts of the economy that continue to struggle, the Wall Street Journal reported. “Our economy will recover fully from this difficult period,” Powell said in prepared remarks posted yesterday that are set for delivery at a congressional hearing today. The Fed will “do what we can, for as long as it takes, to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy.” Powell begins three days of hearings on Capitol Hill today, beginning with the House Financial Services Committee, where he will testify alongside Treasury Secretary Steven Mnuchin. Both men will also appear before the Senate Banking Committee on Thursday. Powell testifies tomorrow before a separate House panel overseeing the U.S. response to the coronavirus pandemic. Powell said that the economy had rebounded in recent months following the end of lockdowns imposed to slow the spread of the virus, and that gains in household spending likely reflected federal stimulus efforts that included expanded unemployment benefits. Powell has said the government will need to do more to support hard-hit businesses, state and local governments, as well as unemployed workers in those sectors to prevent deeper scars from slowing any rebound. Read more. (Subscription required.) 

To watch the House Financial Services hearing scheduled for 10:30 a.m. today, please click here. 

Each year, only a fraction of the Americans who could benefit financially from bankruptcy actually seek relief, according to an Associated Press commentary. About 14 percent of U.S. households — or roughly 17 million — owe more than they own, according to Federal Reserve Bank of New York estimates. Many of these households could benefit from having their debts wiped out, but fewer than 1 percent of U.S. households actually file for bankruptcy each year. Last year, there were 752,160 personal bankruptcy filings. Researchers refer to this gap as “missing bankruptcies” — the filings that could be happening, but aren’t. Now, there’s an additional set of missing bankruptcies: the cases people normally would have filed in recent months, but haven’t. Bankruptcy filings dropped dramatically in the second quarter of this year, to about 60 percent of the average for the previous five years. Courthouses were shuttered by pandemic closures, which made it harder for creditors to pursue foreclosures and wage garnishments. Those are two big drivers of consumer bankruptcy filings, says David Cox, a bankruptcy attorney in Lynchburg, Va., and co-author of ABI's Consumer Bankruptcy: Fundamentals of Chapter 7 and Chapter 13 of the U.S. Bankruptcy Code. Borrowers have benefited from various forms of coronavirus relief, such as suspended payments on federal student loans, mortgage forbearance and expanded hardship options for loans and credit card accounts. The $600 weekly bump in unemployment checks, which expired in July, also kept many people afloat, Cox says. Lower jobless benefits, along with the reopening of courts and continued high unemployment, mean the lull in bankruptcy filings is likely temporary, says Jenny Doling, a bankruptcy attorney in Palm Desert, Calif., who served on the ABI Consumer Bankruptcy Commission’s Chapter 13 Advisory Committee. She worries that people will wait too long to file. Too often, people drain retirement funds or other assets that would be protected in bankruptcy to pay debts that will ultimately be erased, she says. Putting off bankruptcy also can make it harder to come up with the $1,500 needed to file a typical case.

Hertz Global Holdings Inc. is negotiating with its creditors for a loan to bolster operations after months of funding itself during bankruptcy, Bloomberg News reported. The rental-car company is mulling two tentative offers for loans of about $1 billion to $1.5 billion. The proposals came from a group of Hertz’s unsecured creditors and a separate set of first-lien creditors. The offers aren’t yet formal and could fall through as the parties work on the details. Hertz filed for bankruptcy in May without a customary debtor-in-possession loan already in place, opting instead to rely on a large stockpile of cash on hand. The company first disclosed it would seek a DIP loan in August, after its attempt to raise money by selling potentially worthless shares failed. The company meanwhile has resolved a standoff with lenders over leases on its fleet and benefited from rebounding used-vehicle prices. Hertz said in a previous filing that it’s looking for new sources of cash. The travel business remains in a deep slump and much of the proceeds from vehicle sales have been going to pay off creditors.

Ascena Retail Group Inc., the parent company of Ann Taylor and Lane Bryant, won bankruptcy-court approval to sell its plus-size brand Catherines to FullBeauty Brands for nearly $41 million, WSJ Pro Bankruptcy reported. Bankruptcy Judge Kevin R. Huennekens of the U.S. Bankruptcy Court in Richmond, Va. said that he would approve the sale of Catherines’ intellectual-property assets and e-commerce business to FullBeauty Brands Operations LLC, which was named the winning bidder following a multiple-round bankruptcy auction. As part of the deal, New York-based FullBeauty Brands has also agreed to assume certain liabilities, including honoring gift cards. Last week, FullBeauty emerged the victor at a bankruptcy auction for Catherines’ assets after outbidding plus-size women’s apparel retailer City Chic Collective Ltd. When Ascena filed for chapter 11 bankruptcy in July, City Chic had been named the lead bidder, or stalking horse, with an original $16 million offer for the assets. The starting bid at the auction was FullBeauty Brands’ offer of about $17.1 million, court records show.

Sizzler USA filed for bankruptcy yesterday, the latest casual dining chain to fall victim to the effects of the COVID-19 pandemic, WSJ Pro Bankruptcy reported. One of the earliest affordable steakhouses, Sizzler USA was a cultural staple for decades. It experienced its heyday in the late 1970s and early ’80s but its chain of largely franchised operations shrank in recent years. The company said that its franchised locations, numbering more than 90, aren’t affected by the bankruptcy filing. Sizzler added that it plans to keep the 14 company-owned locations operating during the bankruptcy process, which is aimed at renegotiating leases. Sizzler President Chris Perkins blamed the bankruptcy filing on temporary restaurant closures due to the pandemic and landlords’ unwillingness to abate rents despite the company’s financial distress. Founded in 1958, the Mission Viejo, Calif., company mainly has locations in the western U.S. It later expanded to include seafood and salad bars, chasing newer rivals like Bonanza and Ponderosa steakhouses. In papers filed in the U.S. Bankruptcy Court for the Northern District of California, Sizzlers estimated both its assets and debts at less than $10 million. Yesterday’s bankruptcy filing was the second for Sizzler, which sought chapter 11 protection in 1996.

LA Fitness International LLC is weighing options including a capital raise to address its roughly $1.7 billion debt load and help it weather the COVID-19 pandemic, Bloomberg News reported. The fitness chain, operating under a forbearance agreement that expires Oct. 15, is aiming to reach a deal with lenders to address liquidity needs and keep the business going through the pandemic. Lenders have organized with PJT Partners, which is representing them in talks with the company. Advisors from PJT reached out to the company in recent days in anticipation of working toward a consensual deal. The Irvine, Calif.-based chain’s restructuring plans remain fluid and could change depending on market conditions and virus-related openings and closings. Robert Wilson, LA Fitness’ general counsel, said that the chain has been in contact with lenders and PJT and is working with them “to appropriately address the company’s liquidity and its successful emergence from the Covid closures.” He said that the firm hasn’t hired its own advisers and isn’t weighing a bankruptcy filing at this time if lender talks fail. Like many of its competitors, LA Fitness has deferred some rent payments to try to stay afloat while its locations were closed to help stem the spread of COVID-19. The delayed payments are coming due in the next few months and the company may need to raise new money from existing lenders or outside parties to cover rent payments and other operational costs.

Two key Republican senators on Monday introduced legislation that would authorize $28 billion in payroll assistance to avoid thousands of airline industry layoffs set to begin Oct. 1, Reuters reported. Sens. Roger Wicker, who chairs the Commerce Committee, and Susan Collins, who chairs the appropriations subcommittee overseeing airline issues, introduced the measure that would grant airlines a new bailout days before existing payroll support runs out. The bill would tap $11 billion in new funds and $17.4 billion in funding repurposed from other unspent funds from prior coronavirus relief measures.