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The Government Accountability Office (GAO) yesterday urged the Treasury Department and IRS to update and refine their estimate of the number of people who have not yet received their coronavirus relief payments, saying that doing so "could provide greater clarity about which populations may be at risk of missing out on the payment," The Hill reported. "Without an updated estimate, Treasury, IRS, other federal agencies, and IRS’s outreach partners are limited in their ability to appropriately scale and target outreach and communication efforts to individuals who may be eligible for a payment," the GAO said in a report. Legislation enacted in March directed the Treasury and IRS to provide most Americans with a one-time payment of up to $1,200 per adult and $500 per child. The agencies have said that the vast majority of the payments have been issued, but there are still some who have not received the payment to which they are entitled. Treasury estimated in April that 30 million individuals who typically are not required to file a tax return are eligible for a payment, including 14 million who don't receive certain federal benefits. The IRS has indicated that 5.3 million people have used the IRS's web tool for non-filers to claim their payments through July 31. As a result, there could be at least 8.7 million people who are eligible for a payment but haven't gotten one, the GAO said.

A Delaware Chancery Court justice yesterday agreed to fast-track Tiffany & Co’s lawsuit against French luxury goods conglomerate LVMH for trying to back out of its $16 billion deal to acquire the U.S. jeweler, Reuters reported. Vice Chancellor Joseph Slights said he would set a four-day trial beginning Jan. 5, 2021, which is after the Nov. 24 “drop-dead” date for the biggest luxury merger deal to close but before antitrust approvals begin to expire. The U.S. jeweler had pushed for a November trial before the drop-dead date of Nov. 24. The French luxury goods conglomerate argued for a trial beginning in March or April of next year. The decision is Slights’ first time weighing in on the broken deal, the most high-profile of a series of abandoned transactions in the wake of the COVID-19 pandemic. LVMH’s acquisition of Tiffany hit the rocks in September after the Louis Vuitton owner said it could no longer complete the purchase, citing an intervention by the French government and the U.S. jeweler’s weakening performance.

With the U.S. economy experiencing the worst contraction in years due to widespread shutdowns associated with the COVID-19 pandemic, struggling small businesses need debt relief more than ever. While the Small Business Reorganization Act (SBRA) is still relatively new, it has proven to be a useful tool for small businesses seeking to avoid liquidation, according to a New York Law Journal commentary. Not only have courts been lenient in approving retroactive petitions under subchapter V, but new filings also continue to increase, especially in those states most affected by the pandemic. The streamlined and relaxed plan confirmation requirements of SBRA have already proven useful. For example, Sustainable Restaurant Holdings, the parent company of a west-coast sushi restaurant chain severely impacted by the COVID-19 pandemic, successfully confirmed a plan that provided for a going-concern transaction in just over two months. (In re Sustainable Restaurant Holdings, Inc., Case No. 20-11087 (Bankr. D. Del. July 16, 2020). Despite a lack of impaired creditor support, the plan was confirmed pursuant to new section 1191, as it provided for all cash on hand and the revenues and proceeds of all assets of the debtors to be distributed to creditors over time. As companies seek to recover from the COVID-19 pandemic and chapter 11 bankruptcy filings continue to increase, small business debtors, which may not have been able to afford a typical chapter 11, have seemingly embraced the new, more cost-effective option afforded by the SBRA, according to the commentary. Read more.

*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.

SBRA will be one of the many important topics of discussion at the Insolvency 2020 Virtual Summit. Sixteen leading insolvency organizations are participating in the Virtual Summit to bring thought leaders from the worlds of restructuring, insolvency and distressed debt for insightful online programming and engaging networking via a state-of-the-art virtual platform. Click here for more information and to register. 

Auto-parts manufacturer Garrett Motion Inc. filed for bankruptcy over a pandemic-driven sales drop and a dispute with Honeywell International Inc., proposing a $2.1 billion sale of the business to private-equity firm KPS Capital Partners LP, WSJ Pro Bankruptcy reported. Switzerland-based Garrett said that it would tap KPS as the stalking-horse bidder to acquire the company’s assets following its chapter 11 filing on Sunday in the U.S. Bankruptcy Court in Manhattan. The company turned to chapter 11 amid a dispute with former parent Honeywell over the costs of defending and settling personal-injury claims from workers and others exposed to asbestos-containing products. The coronavirus pandemic also has pressured Garrett along with other auto suppliers throughout the U.S. as car makers have slowed down production, laid off workers and burned through cash. “Although the fundamentals of our business are strong and we have continued to try to develop our business strategy, the financial strains of the heavy debt load and liabilities we inherited in the spin-off from Honeywell — all exacerbated by COVID-19 — have created a significant long-term burden on our business,” Garrett President and Chief Executive Olivier Rabiller said.

Consumer law firms are working to help shoppers recoup the value of unused gift cards from bankrupt retail chains, hoping to revive court claims that might otherwise be deemed worthless, WSJ Pro Bankruptcy reported. Gift-card holders filed proposed class-action claims on Friday in the bankruptcy cases of Lord & Taylor and Sur La Table Inc., seeking priority status for those stuck holding potentially unusable gift cards. At the same time, the law firms representing them are planning to request that the U.S. Trustee, the U.S. government’s bankruptcy watchdog, appoint official consumer committees in the same bankruptcy cases. “As retailers are lining up to file bankruptcy because of circumstances that really are beyond their control, ordinary Americans are being left in the cold,” said Thomas Burt, a partner at the law firm filing the claims, Wolf Haldenstein Adler Freeman & Herz LLP. “Their values have gone poof, because somebody messed up.” The litigation firm, along with bankruptcy law firm Sto Helit PLLC, is also seeking class representatives who have unredeemed and unexpired gift cards and gift certificates from Stein Mart Inc. and Century 21 Department Stores LLC, also bankrupt. Each individual holding gift-card claims should get up to $3,025 per person in priority payments, according to the firm. Bankrupt retailers that are permanently closing their stores could collect a windfall if prepaid gift cards are never redeemed. Roughly $2 billion to $4 billion, or up to 4 percent, of gift cards typically go unused every year in the U.S., according to research from Mercator Advisory Group Inc. Retailers that filed for bankruptcy and are shutting down stores usually give gift-card owners about a month to use them. But consumer advocates and lawyers argue that retailers often fail to give proper notice to customers that they might be entitled to a claim just by having a gift card.

The Federal Reserve issued new guidance to banks on Friday in an effort to improve access to new business loans through its $600 billion Main Street Lending Program, the Wall Street Journal reported. The central bank is relying on banks to underwrite loans to qualified small and midsize businesses under the novel effort to reach firms that aren’t large enough to access corporate funding markets, which the central bank has also backstopped. The Fed is trying to encourage banks to make loans that might not otherwise be made to support businesses through the coronavirus pandemic. The program has faced limited uptake since the Fed began purchasing loans in July, with some banks saying they are selling 95% of eligible loans to the Fed because of concerns over how regulators might treat loans to firms whose revenues have been significantly harmed by the pandemic. In response, the central bank said on Friday that it had agreed with bank regulators at the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation to clarify that federal examiners will provide more flexibility in evaluating loans originated under the Main Street program. Through Wednesday, banks have extended slightly more than $1.5 billion in loans under the program. The Treasury Department has provided $75 billion to cover loan losses, which will allows the Fed to extend up to $600 billion in loans. So far, large national banks have mostly shied away from using the program.

Global oil refiners reeling from months of lackluster demand and an abundance of inventories are cutting fuel production into the autumn because the recovery in demand from the impact of coronavirus has stalled, according to executives, refinery workers and industry analysts, Reuters reported. Refiners cut output by as much as 35 percent in spring as coronavirus lockdowns destroyed the need for travel. As lockdowns eased, refiners increased output slowly through late August. But in top fuel consumer the U.S. and elsewhere, refiners have been decreasing rates for the last several weeks in response to increased inventories, a sustained lack of demand and in response to natural disasters. The hit to capacity has been most notable in China. The second largest fuel consumer led the world in oil demand recovery after taming its outbreak of coronavirus. But its refiners also export fuel, and those shipments have been weak due to the virus’s effect on fuel demand in other Asian nations. 

U.S. House of Representatives Speaker Nancy Pelosi (D-Calif.) spoke on Friday with the chief executives of the country’s top airlines, who are urging Congress to approve another $25 billion in assistance to keep tens of thousands of U.S. workers on the payroll past Sept. 30, Reuters reported. The call with Pelosi, House Transportation Committee Chairman Peter DeFazio and the CEOs followed one with labor, where the speaker voiced support for additional aid, according to Association of Flight Attendants-CWA International President Sara Nelson. Airlines and unions are pleading for an extra six months of aid under a bipartisan proposal for another $1.5 trillion in coronavirus relief. The end of this month marks the expiration of the $25 billion in federal payroll assistance that airlines received when the coronavirus first began spreading around the world. Without an extension, United Airlines and American Airlines alone are set to furlough some 40,000 workers on Oct 1. American has also said that it plans to end service to 15 small communities, a move that could be followed by other airlines. President Donald Trump is also open to a stand-alone measure for airlines, though congressional aides say that is unlikely to win support given aid requests from so many other struggling industries. 

The U.S. Agriculture Department on Friday released details of a second round of COVID-19 aid for farmers, which will pay up to $14 billion to growers of major crops such as corn, soybeans and wheat, as well as livestock, dairy and tobacco, Reuters reported. The aid follows a $19 billion relief program announced in April to help U.S. farmers cope with disruptions to the food supply chain and plummeting demand from restaurants during the pandemic. Less than $10 billion has been paid out to date. The administration has been criticized for the $28 billion spent over 2018 and 2019 to compensate farmers for lost sales during a tariff war with China. The new aid package will largely be funded by the Commodity Credit Corp, a Depression-era program created to support farm income. Funds from the corporation do not need to be approved by Congress. The USDA also said that up to $100 million in aid for tobacco farmers will come from the Coronavirus Aid, Relief, and Economic Security Act.