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Briggs & Stratton Corp.’s unsecured creditors will receive 7 cents to 10 cents on the dollar depending on when the company completes its bankruptcy court-approved sale to KPS Capital Partners, the Milwaukee Business Journal reported. The final amount will depend partly on how quickly Wauwatosa-based Briggs can complete its sale to the New York City private equity firm. The sooner the sale is transacted, the more money will be available, said attorneys for Briggs & Stratton and its unsecured creditors committee. “The unsecured creditors are not getting huge returns,” Robert Stark, the lead attorney for the unsecured creditors' committee, said yesterday during a hearing on the sale plan. Bankruptcy Judge Barry Schermer presided over the hearing yesterday morning and on approved the plan in the afternoon. Briggs & Stratton reached agreements with its unsecured creditors' committee and the Pension Benefit Guaranty Corp. prior to the hearing that cleared the path for Judge Schermer’s approval. Judge Schermer's approval of the plan will allow Briggs & Stratton and KPS to proceed with the transaction they announced July 20 when Briggs filed for chapter 11 bankruptcy. The sale will be completed the week of Sept. 21, said Ronit Berkovich, an attorney for Briggs. The funds available to unsecured creditors will range from $35 million to $45 million, assuming the sale closes swiftly, Stark said. That would yield payments of 7 cents to 8.4 cents on the dollar, he said. Read more. 

Berkovich will be among the speakers at the Insolvency 2020 Virtual Summit kicking off today. Click here for more information and to register. 

A group of Seadrill’s creditors have agreed to let the offshore drilling rig operator suspend interest payments this month as part of an ongoing effort to restructure its $7.3 billion debt, the Oslo-listed company said today, Reuters reported. Seadrill, which has so far failed to convince its 43 bank lenders to permanently adjust the terms of its loans, reiterated earlier warnings that a debt restructuring could leave current shareholders with minimal or no ownership at all. The forbearance agreement lasts until Sept. 29 but could be extended. The deal announced on Wednesday covers senior and secured credit facilities, notes and guarantees, but not yet the leasing agreements for three of its rigs, Seadrill said. By postponing payments on its bank debt, Seadrill is at risk of cross-defaulting on those leasing deals, the company said. Seadrill, which itself emerged from chapter 11 bankruptcy court proceedings in 2018, has seen its shares drop more than 98 percent in the last two years. A new debt restructuring could again involve a court-supervised process, the company said, while adding that five legal, investment banking and management consulting firms had been appointed as advisors.

Airport ground services and air-cargo handler Swissport International AG has reached a deal on a balance-sheet restructuring that will preserve its business under pressure from the COVID-19 pandemic, WSJ Pro Bankruptcy reported. The debt-for-equity swap will lighten the debt side of Swissport’s balance sheet as it contends with the impact of reduced air travel on its revenues. Ownership of the Zurich-based company will pass from China’s HNA Group Co. Ltd. to a group of mostly U.K.- and U.S.-based investment funds once the restructuring is complete. A major provider of cargo handling and ground services such as refueling and aircraft cleaning, Swissport has operations at 300 airports in 47 countries. Its revenues are dependent on air travel and many of its airline customers are cutting costs due to health fears and travel restrictions related to the coronavirus. The lockup agreement with senior secured creditors including SVP Global, Apollo Global Management Inc., and TowerBrook Capital Partners “will enable us to confidently trade through the market recovery,” Chief Executive Eric Born said yesterday. Moody’s Investors Service on Friday downgraded Swissport’s corporate ratings to C from Caa2, with a negative outlook, reflecting the anticipated debt restructuring, but the prolonged stress from pandemic-induced loss of revenue.

Flywheel Sports Inc., the operator of spin boutiques that gained popularity with the rise of stationary biking, has filed for bankruptcy and is shutting down, the latest fitness-industry casualty of the COVID-19 pandemic, the Wall Street Journal reported. The company filed for chapter 7 protection in U.S. Bankruptcy Court in New York on Monday after closing all its gyms. Unlike chapter 11, which is typically used by companies seeking to reorganize, chapter 7 is used to wind down businesses and address unpaid bills. Closely held Flywheel was founded in 2009 and, unlike rival Peloton Interactive Inc., it had relied heavily on bricks-and-mortar studios. Flywheel struggled as some of those studios closed down amid the pandemic. Just before the pandemic forced it to shut down its studios, the New York-based chain settled a lawsuit with Peloton over technology theft. Peloton had sued Flywheel, which also produces stationary bikes for home use, accusing the company of stealing its so-called leaderboard technology. Flywheel acknowledged that it copied Peloton and promised to remove the technology from its bikes. Financial terms weren’t disclosed. Flywheel then reached a deal to sell itself to Town Sports International Holdings Inc., the operator of the New York Sports Clubs chain. But amid government-mandated gym closures to stem the spread of the coronavirus, Town Sports scrapped the deal in April.

Avianca Holdings yesterday said that it had appealed a court order that last week banned Colombia’s government from providing the troubled airline with a $370 million loan to finance part of its bankruptcy restructuring, Reuters reported. The airline, which filed for bankruptcy in May due to the coronavirus pandemic’s effect on travel, said that without the loan, keeping the company afloat would become “untenable.” The loan is part of a $2 billion financing package that is key to the carrier exiting bankruptcy protection. The Colombian government’s slice of the package had been questioned in a Colombian court under the argument that Avianca’s guarantees on the loan were insufficient. Last week, Avianca rival, LATAM Airlines Group also faced a setback in its own bankruptcy process when a U.S. judge turned down a $2.4 billion financing package because it considered it to be too advantageous to the carrier’s major shareholders.

Consumers likely boosted U.S. retail spending in August for the fourth month in a row, but at a slower pace than earlier in the summer as the country continued to struggle with the coronavirus pandemic, the Wall Street Journal reported. Economists surveyed by the Journal forecast that retail sales increased a seasonally adjusted 1.1 percent in August from a month earlier. That would mark a slight cooling from the 1.2 percent increase recorded in July. Retail spending has continued to recover from the economic shock created by the pandemic, surpassing prepandemic levels in July. “It’s going to be tough to make further gains because levels are already pretty robust,” Stephen Stanley, chief economist at Amherst Pierpont Securities said, referring to retail sales. Other parts of the economy are also digging back, though at different speeds. Industrial production increased in August for the fourth straight month, but remains well below levels seen before the pandemic. Employers have continued to add jobs across industries, but there are still 11.5 million fewer jobs than in February and the unemployment rate of 8.4 percent is well above the 3.5 percent level from before the pandemic.

Many House Democrats are raising pressure on party leaders to break the logjam with the White House on coronavirus aid, eager to pass a bill before Election Day even with further concessions to Republicans, the Wall Street Journal reported. There is no vote on coronavirus-related aid scheduled for the House’s current three-week session. Anxious Democratic lawmakers, including incumbents defending competitive seats, want negotiators to return to the table to strike a deal before Congress takes a monthlong break for campaigning. Moderate Democrats have sent letters to their leadership, encouraging House Speaker Nancy Pelosi (D- Calif.) to resume negotiations with the White House. Pelosi has held firm that Democrats should support an expansive package that includes money for state and local governments, schools and extends unemployment assistance and food programs. The top two House Democrats, who are rarely at odds, are in disagreement about the next steps. House Majority Leader Steny Hoyer (D-Md.) has expressed a desire to be more flexible on negotiations and pass legislation during the September session, according to aides. Democrats currently have 232 seats in the House, compared with 198 for Republicans and one independent. Pelosi had told White House negotiators she would come down to $2.2 trillion on a bill and hasn’t ruled out a deal. Some Democrats have said that they would be willing to discuss a smaller package, potentially moving closer to the $1.5 trillion the White House has said it could accept. Last week, Senate Democrats blocked Senate Republicans’ whittled-down $300 billion coronavirus aid package, which included $300 in weekly federal jobless payments and aid for small businesses among other items. Even the most impatient Democratic lawmakers don’t see value in taking up the Senate bill, citing the need for more money for state and local governments, public schools and people facing food insecurity that the Senate bill left out. Read more. (Subscription required.) 

In related news, JPMorgan Chase & Co. Chief Executive Jamie Dimon said the economic recovery from the coronavirus recession could be derailed by a lack of additional economic stimulus, the election and a second wave of infections, Reuters reported. Dimon made the comments on Friday to stock analyst Brian Kleinhanzl of Keefe, Bruyette & Woods, who wrote about their meeting in a report. Dimon added that earlier government stimulus had delayed the full effects of the recession. As it hits, customers who have borrowed from the banks will feel the impact, the note said. Consumers are spending less. “Based on their data it is unclear if that trend is getting better or worse,” Kleinhanzl wrote. Read more.

Investigations of possible fraud in the federal Paycheck Protection Program are prompting some loan recipients to seek legal counsel, some lawyers say, the New Jersey Law Journal reported. Some of those cases involve clear-cut allegations of fraud, along the lines of the New Jersey lawyer charged earlier this month with fraudulently obtaining $9 million in PPP loans. But many investigations appear to focus on the more nebulous issue of whether the businesses really needed the money, lawyers said. Defense lawyers say they are getting calls from PPP loan recipients who have been contacted by investigators, or fear they may face charges in connection with the aid program. “What people don’t understand is that there is tremendous political pressure to get the money out the door,” said Christopher Porrino, chairman of the litigation department at Lowenstein Sandler. Knowing whether a PPP recipient will face trouble for taking aide it didn’t need is difficult, Porrino said. Applicants were required to certify that they needed the money to make payroll, “a pretty mushy standard,” he said. Adams said the PPP application process was fairly simple, although the specific requirements changed repeatedly while applications were being taken. The Small Business Administration, which runs the PPP program, apparently did not conduct a lengthy review of each application due to a desire to distribute the funds promptly. “If you sacrificed the speed at which this relief went out to the public for greater due diligence and verification, you may exacerbate an economic collapse. The speed at which this went out helped these businesses,” Adams said. Timothy Anderson, a criminal defense lawyer in Red Bank, said Congress made the application process “as easy as possible,” and when applicants made representations about their finances, “took their word for it.” In making the process so easy, though, the government “assumed a certain amount of fraud,” said Anderson. Read more. 

In related news, U.S. Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell will testify on Sept. 24 before the Senate Banking Committee on coronavirus relief, the committee said in a statement yesterday. 

GNC Holdings Inc. is moving ahead with a sale to China’s Harbin Pharmaceutical Group Co. after no other offers emerged, even as the deal drew scrutiny from Sen. Marco Rubio (R-Fla.), WSJ Pro Bankruptcy reported. The vitamin retailer said yesterday that it was canceling a bankruptcy auction and proceeding with a sale of its assets to Harbin for $760 million. Rubio last week asked Treasury Secretary Steven Mnuchin for a review of the deal by the Committee on Foreign Investment in the U.S. Known as Cfius, the Treasury-led panel vets acquisitions of American companies that might put national security at risk. The senator argued that through the deal, the Chinese government could gain access to sensitive health data about U.S. consumers. Harbin, one of China’s largest drugmakers, is already GNC’s biggest shareholder, with a stake of about 40 percent. A GNC spokesperson said Harbin’s 2018 acquisition of the stake was reviewed by Cfius and the panel made no objections then. GNC filed for bankruptcy in June, slammed by plummeting sales as a result of coronavirus-related store closures and facing debt payments. The company had planned to either sell itself or reorganize in bankruptcy under the ownership of its lenders. Harbin’s $760 million offer for GNC will cover only part of the company’s $903 million in bank and bond debt.