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As Airline Workers Face Steep Job Losses, Unions Call on Congress to Extend $25 Billion Rescue Package

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As tens of thousands of workers in the airline industry stare down job losses starting Oct. 1, union leaders are pushing Congress to extend a multibillion-dollar federal aid program as part of the next coronavirus relief package, The Washington Post reported. A coalition of 13 labor groups said that an extension of a $25 billion payroll support program through March would keep workers in an industry that has been pummeled off the unemployment lines and ensure they can quickly return to their jobs once more people are ready to fly. Failing to act, the unions said, could lead to mass layoffs, “causing potentially catastrophic consequences to this industry and our broader economy.” Airline leaders were vocal in their push for the payroll program and a further $25 billion in loans in the spring when air travel almost collapsed. Now, with their companies no longer fighting for survival, they say they support the idea of an extension but emphasize that it’s the unions taking the lead in the campaign. This week, more than 200 members of the House signed a letter backing the proposal, but the prospects for finalizing a deal remain unclear. Democrats passed a new relief bill in May, when it looked like demand for air travel might recover quickly, and did not include more help for airlines. A bill unveiled by Republican leaders in the Senate this week proposes more help for airports but not airlines.

Romney and Other GOP Senators Propose 11th Hour Extension of Extra Unemployment Benefits

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The extra $600 in weekly unemployment benefits provided the federal government to Americans amid the coronavirus pandemic is expected to expire after Friday as Congress struggles to agree upon the next stimulus package, and a few Republican senators are pitching a last-minute proposal, Yahoo! Money reported. Sens. Mitt Romney (R-Utah), Susan Collins (R-Maine) and Martha McSally (R-Ariz.) introduced an alternative unemployment benefits (UI) legislation, aiming to prevent a gap in the distribution of the benefits. “Unemployed workers should not be left in limbo while Congress continues to negotiate the next relief package,” Sen. Romney said. “Our solution extends the supplemental benefits for three months and incentivizes states to update their UI processing systems. We should act with urgency to help the millions of Americans who are on the verge of losing these additional benefits.” The proposal suggests allowing states to choose between reducing the unemployment benefits to an 80% wage replacement rate or gradually reducing the extra benefits to — $500 per week in August, $400 per week in September, or $300 per week in October. Until a deal is reached between both parties, jobless Americans will not receive any unemployment benefits beyond what their states allow. Most states pay those benefits on weeks ending on Saturday or Sunday. That means July 25 or July 26 was the last time those workers got the extra $600.

Analysis: A New Challenge for Debtors Who Received PPP Loans Under the CARES Act

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The CARES Act and corresponding paycheck protection program (PPP) provisions continue to provide fertile ground for discourse concerning policy implications and legislative intent amid an unprecedented pandemic, according to an analysis by David M. Barlow of the U.S. Bankruptcy Court for the District of Arizona in Phoenix. In the early months of implementing the CARES Act’s PPP provisions, the bankruptcy world was particularly fraught with such debate. Courts across the country grappled with the SBA’s authority to enforce rules prohibiting access to the $659 billion of relief afforded to small businesses solely based on their status as debtors in bankruptcy. Although that phase of litigation appears to have concluded, debtors who received PPP loans and are now seeking loan forgiveness may need to clear a new hurdle. Specifically, lenders of the PPP loans may refuse to process a borrower’s application for loan forgiveness because the applicant’s filing of bankruptcy constituted a default under the terms contained in the PPP loans. Despite going to a lot of places and engaging in what has affectionately been referred to by one commentator as the “SBA Tango,” debtors may end up somewhere they have already been: in front of a bankruptcy court seeking the relief necessary to have their PPP loan forgiven.

Latest Senate Coronavirus Relief Bill Omits Cannabis Banking Protection

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Once again, the Senate appears to be punting on much-needed banking and insurance reform for the cannabis industry, JD Supra reported. The SAFE Banking Act would allow banks and insurance companies to offer their services to marijuana-related businesses without violating federal law. The legislation has had solid support in the House — a standalone bill passed the House with bipartisan support last year and the text of the bill was included in the House’s proposed stimulus package in May 2020. But the Senate has been a different story. The standalone bill continues to stagnate in the Senate Banking Committee and the Senate’s latest round of coronavirus legislation released this week does not include the text of the SAFE Banking Act or any other protections for the cannabis industry. While not unexpected, this move is another blow to proponents of cannabis banking reform. While it is still possible the Senate agrees to add the SAFE Banking Act language to a merged relief bill during bicameral negotiations, JD Supra believes that is unlikely. Rep. Lou Correa’s (D-Calif.) assessment from May still seems prescient. “I think it’s sure to die in the Senate,” said Rep. Correa. “Mr. McConnell has said, in many words and many ways, ‘I’m not interested in moving any legislation of this sort forward.’”

U.S. Economy Plunges at Titanic 32.9% Rate in 2nd Quarter and Points to Drawn-Out Recovery

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An economy badly battered by the coronavirus shrank at a record 32.9% annual pace in the second quarter, underscoring just how big a hole the U.S. finds itself in as it labors to recover from the deepest recession in American history, MarketWatch reported. The tidal wave of damage from the first global pandemic in a century was almost as bad as Wall Street expected. Analysts had forecast a 35% decline in gross domestic product at an annual pace, the official scorecard of the U.S. economy. The recent surge in coronavirus cases in about half of U.S. states has also dealt a blow to a fragile economic recovery. Previously GDP had never shrunk by more than 10% on an annualized basis in any quarter since the government began keeping track shortly after World War II. Consumer spending contracted by a record 34.6% annualized clip in the spring. The decline was especially sharp in services — travel, tourism, medical care, eating out and the like. Businesses that rely on large groups of customers and heavy store traffic bore the brunt of government lockdowns after the pandemic erupted. Spending on services nosedived at a 43.5% annual pace. Households also spent far less on goods, though the decline wasn’t quite as steep.

Fauci to Tell House Panel ‘Unclear’ How Long Pandemic Lasts

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There’s no end in sight to the coronavirus pandemic, Dr. Anthony Fauci and other top government health experts will tell Congress on Friday, the Associated Press reported. “While it remains unclear how long the pandemic will last, COVID-19 activity will likely continue for some time,” Fauci, along with Centers for Disease Control and Prevention head Dr. Robert Redfield and Health and Human Services testing czar Adm. Brett Giroir say in prepared testimony for a special House panel. The panel, the House Select Subcommittee on the Coronavirus Crisis, is divided about how to reopen schools and businesses, mirroring divisions among Americans. The U.S. knocked back the initial spread, but it never got the background level of new cases quite as low. And the resurgence of COVID-19 in the Sunbelt in recent weeks has driven the number of new daily cases back up into the 60,000-70,000 range. It coincided with economic reopening and a return to social gatherings, particularly among younger adults. Growing numbers of emergency room visits, hospitalizations and deaths have followed as grim consequences.
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Can Fashion Survive a Second Wave of COVID-19?

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Even allowing stores to stay open hasn’t stopped a second wave of COVID-19 lockdowns hitting fashion sales in the U.S., Australia and across Europe, heightening fears of wide-scale bankruptcies, Vogue Business reported. Fashion and general merchandise revenues decreased an average of 7.3% across the U.S., in the week ending 19 July, aggregated debit and credit card spending data by Affinity Solutions shows. In California, Texas and Arizona, the declines were considerably higher, with California falling 19.9%, Texas down 13.2% and Arizona slumping 18%, per data from Opportunity Insights, a team of economists based at Harvard University. Fashion retailers have been among the worst hit by the COVID-19 pandemic, with many already on the verge of administration or making significant cuts to their store network and workforce. A resurgence of COVID-19 in the U.S., Australia and some European countries and further lockdowns have come as many governments have announced plans to taper off support for businesses. These trends, compounded by the stress that intermittent reopening and reclosing has on businesses, could lead many more retailers into bankruptcy by the end of the year. Retailers in the U.S. have generally been allowed to keep operating even as other measures to combat COVID-19 have been reintroduced.
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J.C. Penney Lawyer Says Company Nearing Sale, Won’t Liquidate

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J.C. Penney Co. expects to sell itself in coming months to a bidder that will keep the company’s stores operating under the current name, Penney’s lead bankruptcy lawyer said and WSJ Pro reported. Joshua Sussberg of Kirkland & Ellis LLP said that a liquidation was “simply not in the cards” after the company received strong bids from potential buyers that want to keep it in business. One of the proposals came from top lenders including H/2 Capital Partners LLC, Sixth Street Partners and Sculptor Capital Management, which have offered debt forgiveness as currency to buy the company’s real estate holdings out of bankruptcy. Three other bidders made offers for the company’s retail operations. J.C. Penney has said that it would spin off its real estate into an investment trust under the bankruptcy process. The company expects to select a lead bidder and file a proposed asset-purchase agreement with the bankruptcy court early next month, he said. Other bidders will have the opportunity to top the lead offer. The sale requires court approval to close. Sussberg also rejected speculation that Penney would be folded into another retail platform, saying that after the sale, the stores would keep operating under the Penney banner.
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