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J.C. Penney Co. is flirting with collapse, eager for lenders to agree to buy its assets out of bankruptcy after talks broke down with potential bidders including landlords Simon Property Group Inc. and Brookfield Property Partners LP, WSJ Pro Bankruptcy reported. “We’ve hit a stalemate” in negotiations with several outside bidders, J.C. Penney’s bankruptcy lawyer Joshua Sussberg said yesterday during a hearing in U.S. Bankruptcy Court in Corpus Christi, Texas. The department-store chain instead will pursue a bankruptcy sale to top lenders, including H/2 Capital Partners LLC, that would turn them into owners in exchange for debt forgiveness, Sussberg said. “Our lenders are no longer going to be held hostage in negotiations,” he said, adding that J.C. Penney intended to negotiate and document the lender deal within the next 10 days. No agreement has been reached. Putting the retail assets in lenders’ hands wasn’t the first choice for J.C. Penney or the lenders. Their lawyer, Andrew LeBlanc, said the other bidders “have been a disappointment” and that trying to hammer out a takeover so quickly is a “heavy lift.” Negotiations have dragged on past several lender-imposed deadlines. The longer J.C. Penney lingers in bankruptcy, the greater the chance of a liquidation that would dismantle the company’s retail operations and put most of its 70,000 employees out of work.

Women’s apparel retailer New York & Co. and plus-size sister brand Fashion to Figure are set to be sold for $40 million, double the amount offered after their parent company filed for bankruptcy, WSJ Pro Bankruptcy reported. RTW Retailwinds Inc. said yesterday that New York-based investor Saadia Group LLC was the winning bidder at a bankruptcy auction for the two chains’ e-commerce business and all related intellectual property. Saadia Group plans to operate the brands’ e-commerce business as RTW winds down their brick-and-mortar retail operations. Saadia outbid apparel company Sunrise Brands LLC, which had been named the lead bidder, or stalking horse, for the assets with a $20 million offer. Los Angeles-based Sunrise Brands sells branded and private-label jeans and other casual apparel under brands including American Rag and Seven7 Jeans.

Proceedings for the eviction of retail tenants are picking up across the country as courts reopen and states’ moratoriums on evictions are expiring or getting curtailed as the economy reopens, the Wall Street Journal reported. In Miami, a luxury-shopping-center landlord began legal proceedings to evict Saks Fifth Avenue two weeks ago for nonpayment of rent amounting to $1.9 million as of early July. In other parts of the country, smaller retail landlords also have filed lease termination and eviction notices to restaurants, bridal shops, entertainment operators and co-working tenants that haven’t paid rent and weren’t able to come to mutually agreeable modifications to their leases. Before the pandemic, most of these disputes end up getting resolved before the sheriff throws them out, but lawyers said they are seeing higher volumes of disputes which could lead to more evictions. Tens of thousands of leases have been modified, including deferrals or discounts, landlords say, in exchange for lease extensions or other concessions. While overall retail rent collections have improved to 77 percent in July from around 54 percent in April, some tenants, particularly from the apparel, fitness and theater categories, have continued to struggle with payments, according to data from Datex Property Solutions, a real-estate data firm that tracks rent collection on thousands of properties across the country. During the coronavirus-shutdown period that started mid-March and extended to as late as August in some cities, tenants have implored their landlords for deferrals and lower rents to stay in business. States also imposed moratoriums on commercial-real-estate evictions, which offered temporary respite until they expire. New York Gov. Andrew Cuomo extended the state’s moratorium until Sept. 20 from a previously extended Aug. 20 deadline. Landlords said they have modified tens of thousands of leases over the past few months, including deferrals or discounts in exchange for lease extensions or other concessions, such as the removal of clauses that prohibited certain types of tenants in the neighboring space, such as direct competitors or other uses of common-area space. But for some, negotiations reached a stalemate and landlords said they have no choice but to resort to litigation.

Chuck E. Cheese is looking for two more months to negotiate with its landlords over deferred rent, while it also proposes paying part of the full amount due, Bloomberg News reported. CEC Entertainment Inc., parent of Chuck E. Cheese and Peter Piper Pizza, asked to pay reduced rent depending on the status of its operations, rather than forgoing payments in full, attorney Alfredo Perez of Weil Gotshal & Manges, said at a status conference yesterday. The company reached an agreement with the unsecured creditors' committee that provides a sixty-day holdout period for CEC to pay landlords a portion of rent for restaurants that are either closed, open for takeout, or open with limited capacity, Perez said. Judge Marvin P. Isgur of the U.S. Bankruptcy Court for the Southern District of Texas to set hearings for next week for further objections on the matter. CEC earlier asked the court’s permission to put off paying rent for 141 locations that were closed for in-person dining as a result of government measures aimed at preventing the spread of the coronavirus. After getting Judge Isgur’s approval earlier this month to defer rent payments for roughly 21 days on top of the two-month deferral already allowed, CEC reached initial agreements with landlords at 40 of the locations. An additional 10 landlords have signed on to the settlements as of yesterday, while others are in various stages of “getting done,” Perez said.

Oil and gas companies plunged over $156 billion into corporate takeovers and land deals during the second U.S. shale boom, in a massive bet that good times would continue and crude prices would rise. Many of those deals have become financial albatrosses, Reuters reported. The prospect for relief is limited: the industry is still working through the shock of a historic collapse in fuel demand in such a short period of time, prompted by the sudden impact of the coronavirus on global mobility. Oil companies are cutting their budgets to preserve cash and survive — not to spend it on buying more companies. That leaves few companies with the money or the appetite to buy distressed assets. Another 150 North American oil and gas producers could face bankruptcy by the end of 2022, according to Rystad Energy, if crude prices remain near current levels. The shale revolution turned the United States into the world’s largest crude producer, pumping out more than 12 million barrels per day (bpd) at its peak. The industry beat forecasts again and again for production growth, but rarely for financial returns. Still, the promise of future returns lured investors, including a wave of acquisitions that happened after the first boom when prices pulled back sharply from 2014 to 2016. Now, many of the 2016 to 2019 shale deals are financially unworkable due to low oil prices, according to six people familiar with the transactions. 

Chicago faces a 2021 budget deficit of $1.2 billion as the coronavirus pandemic decimates the city’s revenue with businesses shut down due to social distancing while recent unrest hurt reopening efforts, Bloomberg News reported. Next year’s projected gap comes on top of a 2020 deficit of nearly $800 million for its corporate fund, which accounts for many of the services the city provides, Chicago Mayor Lori Lightfoot said yesterday. That’s up from a June forecast of $700 million because rising virus cases have hampered the city’s recovery. Lightfoot called for additional federal stimulus for states and cities and stressed in prepared remarks that Chicago is struggling with “a catastrophic collapse of our local and national economy.” Revenue losses spurred by the pandemic are the biggest factor hobbling city finances in 2020 and 2021, she said. To make up for the gaps this year and next, Lightfoot’s administration will likely need to cut headcount, control spending, refinance debt, borrow and ask for more federal aid. The city has not ruled out raising property taxes and is also looking at a personal property levy on computer leases, which may help raise money as telework expands.

Oil-services provider SAExploration Holdings Inc., which received millions in coronavirus aid from the federal government, filed for bankruptcy with plans to hand ownership of most of the business to lenders and bondholders as a way to deal with challenges facing the energy industry, WSJ Pro Bankruptcy reported. The company, which provides seismic data to the oil and gas industry, filed for chapter 11 in U.S. Bankruptcy Court in Houston on Thursday and said that it has reached an agreement with most of its creditors to restructure a roughly $130 million debt load, eliminating about $74 million in liabilities from its balance sheet. Seeking protection from creditors was the best way to deal with its debt and to navigate the uncertainty of the global economy due to the coronavirus pandemic, along with the lower demand for oil, Chief Executive Mike Faust said. The Securities and Exchange Commission and the Justice Department are investigating SAExploration over matters related to revenue recognition, accounts receivables and tax credits. The Alaska Department of Revenue is looking into the business over matters related to Alaska tax credit certificates.

U.S. energy regulators sided with pipeline operator Energy Transfer in a challenge to bankrupt oil and gas producer Chesapeake Energy’s request to cancel a nearly $300 million contract, court filings show, Reuters reported. Chesapeake ignited a fight when it asked the U.S. Bankruptcy Court in Houston to approve breaking pipeline contracts, including with Energy Transfer and Crestwood Equity Partners. The Federal Energy Regulatory Commission (FERC) in a filing this week argued that it should have equal say with the bankruptcy court over regulated pipeline contracts. FERC recently sought to have its voice included in contract disputes including with bankrupt utility PG&E Corp. “[A]ny court that decides the debtors’ (Chesapeake’s) motion to reject will have to consider the intersection of the bankruptcy code and non-bankruptcy federal law,” said U.S. Attorney Ryan Patrick, who is representing FERC in the case. Energy Transfer wants to keep its contract, insisting it is more complex than many canceled in bankruptcy courts in the past. It also has won Trump administration support for its fight to continue its Dakota Access crude oil pipeline. Company chief Kelsey Warren has been a donor to the president. Chesapeake, the largest oil and gas producer to file for protection from creditors in at least five years, wants to rid itself of $7 billion in debt and expenses including the pipeline contracts. 

Hertz Global Holdings Inc. wants to hand out a further $14.6 million in bonuses to executives, months after the car-rental company shelled out $16.2 million in extra pay meant to keep executives from leaving as the Covid-19 pandemic upended the travel industry, WSJ Pro Bankruptcy reported. Hertz filed for chapter 11 protection in May, its business shredded by pandemic-related restrictions. Before filing for bankruptcy, Hertz laid off thousands of employees and handed out retention bonuses to key leaders. The move was part of a trend in corporate bankruptcy, where distressed companies hand out retention bonuses, or “stay pay,” just before they file for bankruptcy protection. Retention payments are almost impossible for top executives to get after a company files for bankruptcy. Chief Financial Officer Jamere Jackson resigned this month and forfeited his retention bonus. Hertz is sealing much of the information about which employees are in line for the latest round of bonuses. The judge overseeing Hertz’s bankruptcy would need to sign off on the new round of pay enhancements, which the company detailed in court papers filed on Thursday. They are styled as “incentive” bonuses, which are supposed to drive performance.