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Virgin Australia Holdings Ltd bondholders have withdrawn plans for a proposed recapitalization of the airline that was meant to rival one from U.S. private equity firm Bain Capital, a spokesman for the bondholders said today, Reuters reported. Singapore’s Broad Peak and Hong Kong’s Tor Investment Management, which had proposed the rival deed of company arrangement (DOCA) to recapitalise the airline, hold around A$300 million ($216 million) of Virgin’s A$2 billion of unsecured bonds, part of nearly A$7 billion owed to creditors. A court ruling this week makes it impossible to complete due diligence and present a substantially unconditional DOCA proposal to rival Bain’s at a creditors’ meeting on Sept. 4, the spokesman for the bondholders said. Virgin Australia is in voluntary administration, the closest Australian equivalent to chapter 11 bankruptcy provisions used to restructure companies in the U.S. Administrator Deloitte plans to issue a report to creditors on Aug. 25 outlining the return they should expect under the Bain deal, which has not yet been made public.

CBL & Associates Properties Inc., one of the country’s largest mall owners, plans to file for bankruptcy by Oct. 1 after the coronavirus pandemic forced almost all its properties to shut down temporarily, disrupting rent collection, WSJ Pro Bankruptcy reported. Founded during a building boom in the 1970s, CBL owns and operates about 90 second-tier shopping centers around the U.S., including locations in smaller and less wealthy cities. The company said yesterday that it has reached a deal on a debt-for-equity swap with bondholders that would erase $900 million in debt and at least $600 million in other obligations. The mall owner’s rents slowed to a trickle since the World Health Organization in March declared COVID-19 to be a pandemic. Some of CBL’s biggest tenants, such as J.C. Penney Co., have filed for bankruptcy as mall closures dragged on, a process that makes it easier for those retailers to close stores permanently and walk away from leases. Penney has said that it would close eight of its 47 stores at CBL properties. While those eight stores bring in only $2.1 million in annual rents, CBL risks losing other tenants in those shopping centers with leases tied to the presence of large anchor tenants like Penney. A number of other CBL tenants have filed for bankruptcy since the pandemic, including GNC Holdings Inc., Aldo Group Inc. and RTW Retailwinds Inc., the parent company of New York & Co. Other tenants such as Macy’s Inc. have recently said they would permanently close certain stores. Read more. 

Occupancy issues are at the heart of many significant retail cases, as detailed in the ABI publication Retail and Office Bankruptcy: Landlord/Tenant Rights, available at the ABI Store. 

Mall of America, the biggest in the U.S., had its value cut by 16 percent in a new appraisal as the pandemic added to the struggles it already was facing from changing shopping habits, Bloomberg News reported. The 5.6 million-square-foot mall outside Minneapolis was reappraised at $1.94 billion, reduced from $2.31 billion, according to a monthly report on the property’s debt filed by trustee Wells Fargo & Co. Malls suffered from the bankruptcies of apparel and department stores as consumers turned more to online shopping, a trend that’s accelerated since the coronavirus forced many businesses to shut their doors in March. Reappraisals are required under the terms of many contracts for commercial mortgage-backed securities when loans are delinquent. Hotel and retail properties have had the highest delinquency rates, leading to transfers to workout specialists, known as special servicers. About 24 percent of hotel and 14 percent of retail CMBS debt was managed by special servicers in July, according to industry tracker Trepp. The Mall of America appraisal came after the owners, the Ghermezian family, missed three monthly payments on its $1.4 billion in bond debt.

Offshore drilling contractor Valaris PLC filed for chapter 11 bankruptcy on Aug. 19 in the U.S. Bankruptcy Court for the Southern District of Texas as its ability to repay its debt was hampered by a sharp slowdown in business after the coronavirus pandemic forced customers to slash activity, SPGlobal.com reported. The bankruptcy allows Valaris to implement a binding restructuring support agreement and backstop commitment agreement the company entered into with about half of its noteholders. The agreements were designed to decrease the company's debt by more than $6.5 billion and support its continued operations amid the current weak market environment. The deals included the full equitization of Valaris' pre-petition revolving credit facility and unsecured notes, a fully backstopped rights offering to noteholders for $500 million of new secured notes, and the removal of existing equity interests in the company for warrants and payment of trade claims. Weeks ahead of the bankruptcy filing, Valaris filed a Form 10-Q with the SEC in which it warned it could file for bankruptcy soon to deal with debt totaling about $7 billion. The company said it recently missed $58.5 million in interest payments on a total of $2.1 billion in bonds. It also said there is "substantial uncertainty" over whether it would meet a $79.2 million interest payment in mid-August, along with $122.9 million outstanding principal on a portion of bonds also coming due.

Offshore oil servicers are going bust at the fastest pace in three years as explorers spurn high-cost drilling to deal with a worldwide slump in commodity prices, Bloomberg News reported. The debacle, triggered by the pandemic-driven drop in oil prices, has already claimed some of the biggest companies that supply rigs, transportation and other support services to deep-water drillers. Noble Corp. and Diamond Offshore Drilling Inc. have filed for chapter 11 since the start of the pandemic-driven oil downturn, while Valaris Plc filed for bankruptcy yesterday. Firms including Transocean Ltd. — the world’s the world’s biggest owner of deep-water oil rigs — along with Seadrill Ltd. and Pacific Drilling SA are exploring strategic options as they seek to stave off default, leaving more than $30 billion of debt at risk. The industry’s turmoil has sparked the biggest wave of restructurings since 2017, when the effects of the last oil price downturn reverberated through the industry.

A bipartisan group of 20 House lawmakers are calling on congressional leaders to improve the diversity of a coronavirus relief oversight panel to address the recession’s unique toll on minorities and women, The Hill reported. In a letter to Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Mitch McConnell (R-Ky.), the group urged Congress to take up measures to expand and refocus the Congressional Oversight Commission created through the Coronavirus Aid, Relief and Economic Security (CARES) Act. “The COVID-19 pandemic has disproportionately impacted women and racially diverse communities,” the lawmakers wrote, urging Pelosi and McConnell to foster “a greater focus on the disparate impacts of the novel coronavirus (COVID-19) pandemic in diverse communities.” The CARES Act created a five-person bipartisan commission to oversee how the Federal Reserve and Treasury Department used $500 billion allocated by the bill for emergency lending and grant programs for businesses and municipalities. But the bipartisan group of 19 House Democrats and one Republican is urging Pelosi and McConnell to advance a bill to add more members to the panel and broaden its focus. The coronavirus-driven recession forced thousands of businesses across the U.S to close and lay off millions of workers in the quickest, steepest economic downturn since the Great Recession. The pandemic has taken an even greater toll on people of color and businesses owned by women and minorities, which typically hold smaller financial cushions and lack reliable access to credit.

Some Democrats and Republicans have a “real desire” to reach agreement on a smaller coronavirus relief bill that could be worth around $500 billion, a senior Trump administration official said late on Tuesday, Reuters reported. The official said the agreement could include funding for the U.S. Postal Service, additional funding for loans to small- and medium-sized businesses to keep workers on their payrolls and potentially added money for schools. “I think there’s a real desire by some in the Democratic caucus and some in the Republican conference, both in the House and the Senate, to do a smaller deal on the things we can agree upon,” the official said. “It could be about $500 billion.” That amount still falls far short of what Democrats have been seeking in protracted discussions with the administration. U.S. House of Representatives Speaker Nancy Pelosi on Tuesday said Democrats in Congress are willing to cut their relief bill in half to get an agreement on new legislation. The Democratic-led House passed legislation with over $3 trillion in relief in May. Democrats offered this month to reduce that sum by $1 trillion, but the White House rejected it. The two sides remain about $2 trillion apart, with wide gaps on funding for schools, aid to state and local governments, and enhanced unemployment benefits. The senior administration official said while a narrow agreement was possible on some issues, he did not see aid to state and local governments and a fresh round of stimulus checks as possible at the moment.

Federal Reserve officials said at their meeting last month they expected the economy would require greater government support to recover from the coronavirus pandemic, though they didn’t signal at which of their coming meetings they would deploy those tools, the Wall Street Journal reported. Minutes from the Fed’s July 28-29 meeting released yesterday showed officials believed more government spending would be needed to prevent a longer or deeper downturn amid difficulties states have faced suppressing the virus. A number of officials also believed more stimulus from the Fed could be required, the minutes said. With interest rates already cut to near zero, Fed officials could do this by providing more specifics about how long they will keep rates low — including by describing an inflation threshold and various labor market conditions that would warrant withdrawing any stimulus. The minutes didn’t offer strong signals about the timing of such a move, saying only that a number of officials believe more explicit guidance would be “appropriate at some point.” That suggests central bank officials are keeping their options open as they look to forge agreement on how and when to sequence their next moves. The Fed’s next meeting is scheduled for Sept. 15-16, and officials meet again in early November. Officials didn’t announce new policy steps at the conclusion of their July meeting.

Gov. Larry Hogan (R) announced yesterday that Maryland has applied for federal aid under President Trump’s recent order to increase unemployment benefits, meaning that workers who lost jobs because of the coronavirus pandemic could see a boost in their weekly aid checks, the Washington Post reported. Hogan said that Maryland has applied for the lost-wage assistance grant from the Federal Emergency Management Agency, which would provide an additional $300 a week to out-of-work residents. During the first months of the pandemic, the federal government provided $600 a week for unemployed workers, in addition to state benefits. But those payments stopped at the end of July. With Congress and the White House deadlocked over a new relief package, Trump called for a $400 weekly boost in payments, with states covering 25 percent of the cost ($100 per person each week) and FEMA providing the rest. The plan was tweaked to allow states to use existing unemployment payments to cover their share after a bipartisan group of governors — whose states are facing massive budget shortfalls due to the pandemic — said they couldn’t afford any additional payments. Under that option, claimants would receive an additional $300 per week.