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When hedge-fund manager Dan Kamensky found out a prominent investment bank might challenge him for a piece of Neiman Marcus Group Ltd.’s crown-jewel asset, he set about eliminating his competition, a government inquiry found, the WSJ Pro Bankruptcy reported. Within 15 minutes of learning of the competing bid, he was pressuring the investment bank, Jefferies LLC, to stand down, according to Justice Department watchdogs who looked into his actions. “DO NOT SEND IN A BID,” he wrote in a chat message to an unnamed Jefferies employee, the government officials wrote in an investigative report submitted on Wednesday in Neiman’s chapter 11 proceedings. The report found “substantial evidence” that Kamensky, founder of Marble Ridge Capital LP, breached his fiduciary duties by using his pull with Jefferies to dissuade it from bidding for shares of MyTheresa, Neiman’s thriving e-commerce business. When Jefferies disclosed its conversations with Mr. Kamensky, he urged it to back up his preferred version of events that the episode was a misunderstanding, unaware the phone call was being taped, according to the report. The Justice Department’s Office of the U.S. Trustee, which monitors the nation’s bankruptcy courts, said the report is preliminary and Mr. Kamensky hasn’t had the chance to respond or rebut the conclusions. The report suggested a formal proceeding in open court to determine any next steps. Read more. 

Distressed investment firm Marble Ridge Capital LP plans to wind down its funds after a government report called into question the actions of its managing partner, Dan Kamensky, during the Neiman Marcus Group bankruptcy, the firm said yesterday, Reuters reported. “After much consideration, and in light of the operating environment, we have made the difficult decision to commence an orderly wind-down of the Marble Ridge funds,” the firm told clients in a letter seen by Reuters. “Marble Ridge will manage the liquidation in the best interests of our investors and with the objective of protecting and enhancing the value of the funds’ assets.” Kamensky admitted a “grave mistake” to the Department of Justice’s U.S. Trustee division, which oversees bankruptcies, in interfering with a potential bid for certain assets of the luxury retailer. Read more.

Companies across the US are awarding top executives multimillion-dollar “retention” bonuses shortly before declaring bankruptcy, angering creditors who claim the payments are rewards for failure, the Financial Times reported. The practice has become commonplace among distressed companies pushed over the edge by the coronavirus pandemic. The list includes high-profile collapses such as JC Penney, Hertz and Neiman Marcus; companies squeezed by the energy downturn such as Whiting Petroleum; and smaller groups where revenues have been hit by the health crisis, such as century-old lawnmower engine maker Briggs & Stratton. In most cases, the payments are tied to senior managers remaining in their roles while the company goes through a reorganisation. Supporters of the practice say it limits disruption for groups already facing a tumultuous future, and argue that retaining top talent is critical to a successful turnaround. But creditors have struck back, particularly at companies that have rewarded managers who presided over slumps in their businesses. Often, retention payments are granted weeks — or even days — before groups lay off workers and refuse to pay interest to lenders. Retention awards in the run-up to bankruptcy have become more prevalent in recent years, following a 2005 law that restricted the payment of bonuses when a company is actually in bankruptcy proceedings. Critics of pre-filing awards say they flout the spirit of that law, which was intended to curb payouts to executives when a company is in distress.

With the labor market showing new fragility, most states have yet to seek funds under President Trump’s stopgap plan to supplement weekly jobless pay, the New York Times reported. The Labor Department reported Thursday that new state unemployment claims jumped to 1.1 million last week, a sign that some employers continue to lay off workers in the face of the coronavirus pandemic while others remain reluctant to hire. “It definitely suggests that momentum in the recovery is slowing,” said Scott Anderson, chief economist at Bank of the West. “The labor market is in the I.C.U., and it needs a shot of adrenaline in the form of federal aid.” There are no signs that kind of boost is imminent, however. Nearly 30 million people are drawing unemployment pay in some form, but a $600 weekly supplement to state benefits — credited with keeping millions afloat — expired at the end of July. Democrats and Republicans have been at an impasse on a new round of aid, and no action is expected before September. President Trump bypassed Capitol Hill this month to provide a $300 weekly supplement, drawn from federal disaster funds, to those receiving unemployment pay. But by Thursday, fewer than a quarter of the states had been approved for the program, and only Arizona had put it into action. Florida, New York and Texas have held off on applying as they seek guidance on the program’s rules and mull the technological needs for processing payments. Even states that intend to take part, like Pennsylvania, have raised doubts about whether it is workable. Trump’s executive action caps spending on the program at $44 billion, a figure that officials from the Federal Emergency Management Agency and the Labor Department said yesterday that should be enough to last four to five weeks. The funds are intended to be retroactive to Aug. 1, so recipients might be paid only through early September. The previous $600 weekly benefit, in place for four months, contributed $70 billion a month to the economy, or nearly 5 percent of total household income.

A new study released by the government’s watchdog the Government Accountability Office (GAO) has found that long wait times for appeals for disability claims had disastrous impacts for those in need of disability benefits from the Social Security Administration. Over 100,000 people died while waiting for their appeal, while roughly 50,000 had to file for bankruptcy, YahooFinance.com reported. The report comes at a time of “heightened risk” to “worsening medical and financial conditions,” the GAO says, for Americans living with disabilities due to the coronavirus pandemic. The report’s findings could indicate troubling times ahead for the millions who might need disability benefits. Roughly 10 million people receive disability benefits, according to the SSA Annual Statistical Report. The majority of disability benefits went to disabled workers — 87 percent of all beneficiaries. In December of 2018, payments to disabled beneficiaries totaled almost $11.6 billion. As part of this analysis the GAO examined wait times and outcomes during the fiscal years 2014 to 2019. They examined applicants for disability benefits who appealed Social Security Administration’s (SSA) decision to deny benefits or only partly award benefits they applied for. The study found that most people who filed an appeal “waited more than 1 year for a final decision on their claim.” According to the analysis of SSA data, wait times spiked from 561 days on average in 2010 to nearly 840 days on average in 2015. The study says this wait time followed an increase of disability claims subsequent to the Great Recession, which could prove worrisome given the COVID-19 pandemic. 

The Department of Housing and Urban Development says that it will extend a ban on evictions in single-family houses with mortgages issued by the Federal Housing Administration, a protection that would be far narrower than the now-expired eviction moratorium in the CARES Act, CNBC.com reported. The expired moratorium also included properties backed by government-sponsored lenders Fannie May and Freddie Mac, and was estimated to have covered nearly a third of the country’s rental units. “HUD’s new moratorium only applies to a slight fraction of the units covered under the CARES Act and does nothing to protect the overwhelming majority of renters in the United States from eviction and its devastating consequences,” said Emily Benfer, an eviction expert and visiting professor of law at Wake Forest University. The federal eviction moratorium in the CARES Act expired at the end of July, and since it required tenants in protected properties to get 30 days notice of their eviction, proceedings will be able to start as early as next week, said Eric Dunn, director of litigation at the National Housing Law Project. At the same time that federal protections against eviction come to an end, many states that paused their own proceedings have now allowed them to resume. Since July 15, eviction moratoriums have lapsed in Michigan, Maryland, Maine and Indiana. Read more.

In related news, with less than two weeks before a statewide moratorium on renter evictions expires, California lawmakers on yesterday declined to back a plan that would have provided tax credits for landlords while sending a separate proposal that would protect tenants back for additional negotiations with Gov. Gavin Newsom (D), the Los Angeles Times reported. Three other bills dealing with affordable housing and homelessness were also sidelined for the year as the Senate and Assembly appropriations committees rushed to meet an end-of-the-month deadline for acting. The Assembly Appropriations Committee sidelined a measure by state Sen. Anna Caballero (D-Salinas) that would have created a process for preventing evictions for three years as long as a landlord and tenant reach an agreement on forgiving rent in exchange for the landlord receiving a tax credit. Senators moved forward a bill by Assemblyman David Chiu (D-San Francisco) that would prevent evictions for up to a year. The measure, AB 1436, would block evictions of renters who missed payments during the COVID-19 “emergency period,” which would end 90 days after the state of emergency order is lifted or April 1, 2021, whichever occurs first. Landlords would also be allowed mortgage forbearance under the legislation. He cited a U.S. Census Bureau survey from last month that showed 4.3 million renters in California reported “little to no confidence” in their ability to pay rent in August. The measure is opposed by groups including the California Chamber of Commerce and the California Apartment Assn., which represents 50,000 owners and managers. Debra Carlton, an executive vice president of the association, said the delay in rents until 2021 will be a burden for senior landlords who depend on rentals for income and owners who need the revenue to pay mortgages and repairs. Read more.

Additionally, New York Gov. Andrew Cuomo (D) signed an executive order yesterday expanding a coronavirus-related emergency moratorium on evictions and foreclosures of commercial properties until Sept. 20, the New York Post reported. The move gives business owners heavily impacted by state-ordered closures associated with COVID-19 more another month to meet their rental obligations. “While we have made great progress in keeping New York’s infection rate low, this pandemic is not over and as we continue to fight the virus, we are continuing to protect New York businesses and residential tenants who face financial hardship due to COVID,” Cuomo said. It’s an extension from an original March 20 eviction moratorium impacting commercial and residential renters, although Cuomo recently signed another bill allowing tenants some protections if they can prove they’ve been negatively impacted by the coronavirus. But commercial tenants are feeling the crush — and have been for five months. A recent survey by the NYC Hospitality Alliance found over 80 percent of bar and restaurant owners couldn’t pay their full July rent. Nearly 40 percent said they wouldn’t be able to pay at all. Read more.

The coronavirus pandemic is upending the way U.S. consumers shop and the holidays will be no exception as major retailers and shippers roll out their earliest-ever shopping season, Reuters reported. Target, Best Buy and Kohl’s have moved winter holiday promotions up to as early as October. They also joined rival Walmart in announcing store closures on Thanksgiving and plans to bypass the midnight Black Friday door-buster sales that traditionally mark the start of the holiday season but are incompatible with the pandemic’s social distancing recommendations. Kohl’s Chief Executive Michelle Gass said on Tuesday that “a holiday season like no other” means emphasizing comfortable apparel, home essentials and kids’ toys, all categories that have performed well as shoppers largely opt to remain at home. Target CEO Brian Cornell on Wednesday said the retailer will stress same-day delivery and add thousands of items available via these services, including more gifts and essentials during the “very different holiday season.” One supplier to a big box retailer told Reuters that the chain is bracing for a 30 percent decline in holiday spending this year, though the National Retail Federation (NRF) trade group has yet to release its holiday forecast.

Pending approval from the U.S. Bankruptcy Court, Astria Health and the Washington State Nurses Association (WSNA) have settled a complaint over the closure of Regional hospital, the Yakima (Wash.) Herald reported. Earlier this year, WSNA filed a complaint against Astria Health, stating that it violated several state and federal laws when it closed Astria Regional Medical Center in Yakima in January. Astria filed for chapter 11 protection in May 2019. In April, Judge Whitman L. Holt agreed to proceed with part of the complaint related to whether Astria Health had violated the federal WARN Act by not abiding by the 60-day notice the law requires. The labor law requires employers with 100 or more employees to provide 60 days advance notice about plant closings and mass layoffs. Holt dismissed the part of the complaint where WSNA asserted that Astria violated the Washington State Payment and Collection Act and the Washington Wage Rebate Act by not quickly paying the nurses for paid time off. In the joint motion filed late last month, WSNA and Astria Health wrote that all parties agreed it was best to settle rather than go through a lengthy and costly process in court. Under the agreement, former Astria Regional Medical Center nurses represented by WSNA would receive a share of a settlement payment from Astria Health. The two parties declined to reveal the exact amount of the payment.

Springfield Hospital officials yesterday told Vermont state regulators that they aim to file a plan to exit chapter 11 bankruptcy within 60 days, and to execute that plan by the end of the calendar year, Valley News reported. The plan, which will require the approval of the bankruptcy judge, would separate financially the 25-bed hospital in southern Windsor County, Vt., and Springfield Medical Care Systems, the federally qualified health center which also includes community health centers in Charlestown and the Vermont communities of Chester, Ludlow, Bellows Falls, Londonderry and Springfield. Achieving a sustainable future relies on continuing to keep hospital expenses to a minimum, an effort Halstead said he and others at Springfield Hospital have worked to do since the hospital’s large debt came into the spotlight in late 2018 and since it entered bankruptcy in June of 2019. It also relies on patients returning to the hospital for treatment at pre-COVID-19 rates by Oct. 1 and on a successful exit from bankruptcy with sufficient cash on hand to continue operations, he said. As of June 30, Springfield had 56 days of cash on hand.

U.S. companies are writing down more of their assets during the coronavirus pandemic than they have in years, the Wall Street Journal reported. Finance chiefs are reducing the value of company assets such as airplanes, cruise ships and movie theaters in response to changes in consumer behavior that threaten the viability of their business models. “You have assets at least for a period of time generating zero — or close to zero — revenue,” said Steve Hills, who heads up the technical accounting consulting unit at Stout Risius Ross LLC, an advisory firm. The 2,000 largest U.S. businesses by market capitalization — from oil companies to airlines and restaurant chains — have been recording higher pre-tax impairments as existing assets and investments produce poor returns amid the widespread economic downturn. Impairment charges totaled $261.7 billion for the first six months of the year, up 187.6% from the $91 billion booked during the same period in 2019. The first-half figure is also 29% larger than the $203.1 billion recorded in all of 2019, according to financial-technology firm New Constructs LLC.