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Offshore drilling rig contractor Seadrill’s ongoing attempt to restructure its massive debt could leave current shareholders with minimal or no ownership at all, the Oslo-listed company said today, Reuters reported. Demand for exploration and drilling has fallen further during the COVID-19 pandemic as oil firms seek to preserve cash, idling more rigs and leading to additional overcapacity among companies serving the industry. Seadrill, controlled by Norwegian-born tycoon John Fredriksen, said that it has failed to convince its 43 lenders to adjust the terms of its $5.7 billion bank debt. “As a consequence, we did not proceed with the bank consent and have retained financial and legal advisors to prepare for a comprehensive restructuring of our balance sheet, such a restructuring may involve the use of a court-supervised process,” it added. Luxembourg and Houston-based Pacific Drilling has also said that it is considering chapter 11 as an option to address its long-term liquidity. 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.

Delta Air Lines is set to furlough 1,941 pilots in October, the carrier said in a memo to employees yesterday that noted the fallout from the COVID-19 pandemic and plunging air travel demand, Reuters reported. U.S. airlines have warned they will need to furlough tens of thousands of workers once $25 billion in U.S. government stimulus funds run out in September. The aid, which covered employees’ pay, was meant to help them weather the pandemic and preserve jobs until a recovery, but travel remains depressed. “We are six months into this pandemic and only 25 percent of our revenues have been recovered. Unfortunately, we see few catalysts over the next six months to meaningful change this trajectory,” Delta’s head of flight operations John Laughter said in the memo. He said the airline is “simply overstaffed.” Atlanta-based Delta had originally estimated a surplus of 2,558 pilots but reduced the number of involuntary furloughs following early retirement and voluntary departure programs, a spokeswoman said.

New York City faces a $9 billion deficit over the next two years, high levels of unemployment and the prospect of laying off 22,000 government workers if new revenue or savings aren’t found in the coming weeks, the Wall Street Journal reported. The growing economic crisis, brought on by the coronavirus pandemic, has alarmed New York Gov. Andrew Cuomo (D) so much that he recently asserted greater control over a panel overseeing the finances of the nation’s largest city. Earlier this summer, Cuomo appointed three close allies to the New York State Financial Control Board. The board played a prominent role during the city’s last fiscal crisis in the 1970s, when it wielded broad legal power over the city’s budget and made difficult spending decisions. Cuomo has grown concerned about the direction of the city budget, state Budget Director Robert Mujica said in an interview. The city had to cut billions to balance its latest budget, but it still has major funding challenges. Local officials have called on Congress to approve a relief package for the city, but talks about a bill are ongoing. As a backstop, New York City Mayor Bill de Blasio asked state lawmakers for authorization to borrow up to $5 billion to fund operating costs. Democrats who control the state Senate objected, and the request hasn’t been granted.

German Finance Minister Olaf Scholz said on today that coalition parties have agreed to extend a freeze on insolvency rules put in place to avoid a wave of corporate bankruptcies due to the coronavirus crisis, Reuters reported. Speaking to reporters in Vienna, Scholz said that his centre-left Social Democratic Party (SPD) and Chancellor Angela Merkel’s conservative bloc sealed a compromise deal ahead of a coalition meeting scheduled later on Tuesday. In March, the government gave companies that find themselves in financial trouble due to the pandemic a respite by allowing them to delay filing for bankruptcy until the end of September. Justice Minister Christine Lambrecht, a Scholz ally and SPD member, had suggested extending the moratorium until the end of March 2021. But her plan drew criticism from Merkel’s lawmakers who said the waiver should expire at the end of this year. Scholz did not give any details on the agreement, but added that the deal would be announced later. A coalition member with knowledge of the talks told Reuters that parties had agreed to extend the insolvency waiver until the end of this year for indebted but still solvent companies.

Virgin Australia Holdings Ltd’s unsecured creditors will receive an average return of 9-13 percent of their funds as part of U.S. private equity group Bain Capital’s proposed purchase of the airline, administrator Deloitte said in a report today, Reuters reported. The unsecured creditors include 6,500 bondholders who are owed A$2 billion ($1.43 billion) by the country’s second-biggest airline and will receive a return of 8.9 percent to 13.3 percent, less than the 14.4 percent return for critical suppliers. Priority creditors and employees will receive 100 percent of funds owed, the report said. The Bain deal will be voted on at a meeting of creditors on Sept. 5. Creditors were owed around A$7 billion when the airline in April entered voluntary administration, Australia’s closest equivalent to the U.S. chapter 11 bankruptcy process. Unsecured bondholders Broad Peak and Tor Investment Management on Friday withdrew plans to propose a rival debt-to-equity recapitalization deal they had said would provide a higher return, leaving the Bain deal as the only real option apart from liquidation. Deloitte said in a statement that Bain’s total financial commitment was around A$3.5 billion, which includes all employee entitlements paid, all customer travel credits honored, assumption of a significant portion of secured debts and aircraft lease liabilities and a return to unsecured creditors.

A bankruptcy judge in Texas raised the question of whether the findings of an investigation into Marble Ridge founder Dan Kamensky should be referred to federal prosecutors to determine whether the investment manager committed a crime, Bloomberg Law reported. At the end of a court hearing on Friday, U.S. Bankruptcy Judge David R. Jones asked lawyers for the Office of the U.S. Trustee, an arm of the Department of Justice that deals with bankruptcy matters, whether they had given the results of their probe into Kamensky to federal prosecutors. The Trustee’s office said on Wednesday that the hedge fund manager had improperly tried to stop another bidder from buying some of Neiman Marcus Group Inc.’s best assets in the department store’s bankruptcy case. When told by a lawyer for the Office of the U.S. Trustee that it wasn’t clear whether prosecutors are involved, Judge Jones said that he will set a further court hearing on the matter. Kamensky declined to comment.

In related news, Marble Ridge Capital LP, a hedge-fund firm known for investing in distressed companies, is shutting down after a government inquiry found that founder Dan Kamensky tried to suppress bidding for a piece of bankrupt retailer Neiman Marcus Group Ltd, WSJ Pro Bankruptcy reported. A spokesman for Marble Ridge said on Friday that it is “winding down.” The decision marks a stunning fall for Kamensky, who built a reputation sifting through the subprime mortgage meltdown, founded Marble Ridge in 2015 and grew it to a firm with roughly $1 billion in assets under management. Since 2018, Kamensky has waged a legal campaign against Neiman’s private-equity backers, helping snare a big settlement that became his undoing. On Wednesday, watchdogs from the Justice Department concluded that Kamensky had secretly coerced a major investment bank not to bid for shares in Neiman’s e-commerce business, MyTheresa, that are part of that deal. Read more.

One of the most successful elements of the government’s response to the coronavirus recession — protecting people on the margins from falling into poverty — is faltering as the safety net shrinks and federal benefits expire, the Washington Post reported. Major recessions are especially fraught for low-income earners, whose finances can veer from tenuous to dire with one missed paycheck. But as the economy cratered this spring, economists and poverty experts were mildly surprised to discover that the torrent of government support that followed — particularly the $600 a week in expanded unemployment benefits and one-time $1,200 stimulus checks — likely lowered the overall poverty rate. In fact, 17 million people would have dropped below the poverty line without the $500 billion in direct intervention for American families, said Zach Parolin, a researcher at Columbia University. Now, data show, those gains are eroding as federal inaction deprives Americans on the financial margins of additional support. If the unemployment rate stays around 10 percent and no new stimulus is delivered, “we can expect poverty rates to rise and climb higher than those observed in the Great Recession,” Parolin said. The poverty threshold for a family of four is $26,200, according to the U.S. Department of Health and Human Services. Data collected by the Census Bureau capture the financial pain. For the week that ended July 21, the most recent numbers available, roughly 29 million U.S. adults — about 12.1 percent — said their household sometimes or often didn’t have enough to eat the preceding seven days, according to the Center on Budget and Policy Priorities. Nearly 15 million renters said they were behind on rent during the same period.

Two weeks have passed since President Trump announced that he would sidestep a congressional stalemate to deliver $400 in extra weekly benefits to tens of millions of unemployed Americans — a short-term fix meant to replace the $600-a-week emergency federal supplement that expired last month, the New York Times reported. Since then, as more details of the plan — known as Lost Wages Assistance — have emerged, so have problems with finding the funding and getting it to the hands of those who need it. What is now clear is that the federal supplement is $300 a week, not $400. And by Thursday, only one state, Arizona, had started paying out. The federal government is offering an extra $300 a week to unemployed workers. Trump is using money from the Federal Emergency Management Agency, which normally provides disaster relief. The additional $100 was supposed to be supplied by states, but most are struggling to meet other expenses. Tax revenues have been sinking at the same time that costs — like precautions to curb the spread of the coronavirus — have soared. Ultimately the administration said that the states’ basic benefit payments could be counted toward their $100 share. Montana is the only state so far to choose the $400 option, according to FEMA. Jobless workers with the smallest benefits will not get the supplement. Only people who qualify to receive at least $100 in unemployment benefits each week — either through the regular state program or a federal pandemic assistance program — are eligible for the extra federal funds. In Colorado, for example, the rule leaves out 6 percent of those receiving unemployment pay — or roughly 28,000 people, said Cher Haavind, deputy executive director of the state Department of Labor.

The number of serious mortgage delinquencies rose to a 10-year high in July, according to a report released Friday by financial data firm Black Knight, The Hill reported. The number of homes with mortgage payments more than 90 days past due but not in foreclosure rose by 376,000 in July to a total of 2.25 million, according to Black Knight. Serious mortgage delinquencies are now at the highest level 10 years and have increased by 1.8 million since July 2019. While the total number of delinquent mortgages dropped nearly 7 percent since June, the record rise of serious delinquencies is a troubling sign in the wake of the recent expiration of federal foreclosure and eviction protections. The Coronavirus Aid, Relief and Economic Security (CARES) Act enacted in March imposed a ban on foreclosures and evictions until July 31. The Trump administration and lawmakers failed to reach a deal to extend those protections after they expired, and an executive order issued by President Trump to mitigate the damage may not be sufficient to protect all who are at risk of losing their homes, according to housing advocates.