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California Pizza Kitchen Is Latest Chain to File for Bankruptcy

Submitted by ckanon@abi.org on
California Pizza Kitchen Inc. filed for chapter 11 in Houston on Wednesday, becoming the latest restaurant chain to try to cut debt as it grapples with the pandemic, Bloomberg reported. The company, which operates more than 200 restaurants in the U.S. and abroad, has reached an agreement with a majority of its senior creditors on a restructuring plan. It’s looking to reduce its debt by $230 million, more than half of the total, and raise additional funding from existing lenders to buttress its balance sheet, according to court filings. Founded in 1985 in Beverly Hills, California Pizza Kitchen was acquired by private-equity firm Golden Gate Capital in 2011. The restaurant chain has been struggling in the past two years amid changing consumer behavior. The company appointed advisers in 2019 for a sale or a restructuring. The COVID-19 pandemic disrupted the chain’s business, which generated 78% of revenues from on-site dining before the crisis. The firm closed 46 of its restaurants and obtained $30 million of emergency financing from lenders already in April, but revenues were still 40% lower than 2019 levels as of the last week of June. The case is In re California Pizza Kitchen Inc., 20-33752, U.S. Bankruptcy Court, Southern District of Texas (Houston).
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Covid19
Retail
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Double Your PPP Loan: Automatic Forgiveness Under $150,000, and More

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Sens. Marco Rubio and Susan Collins have released a 92-page proposed bill for the “Continuing Small Business Recovery and Paycheck Protection Program Act,” Forbes reported. The act is intended to correct some problems and a number of challenges that PPP borrowers have had, while opening new opportunities for many borrowers who were not treated as well as others under this Program. There is something in this new act for almost everyone. Click here to read the bill.
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Legislation
Covid19
Small Business
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U.S. Is Expected to Report a Record-Breaking Economic Plunge

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Having endured what was surely a record-shattering slump last quarter, the U.S. economy faces a dim outlook as a resurgent coronavirus intensifies doubts about any sustained recovery the rest of the year, the Associated Press reported. A huge plunge in consumer spending as people stayed home and avoided shopping, traveling or gathering in crowds as the virus raged is estimated to have sent the economy sinking at a roughly 32% annual rate in the April-June quarter. That would be more than triple the previous worst quarterly economic fall, a 10% drop set in 1958. Depressed activity in such areas as business investment, home construction and government spending also likely contributed to the worst quarterly contraction on records dating to 1947. On Thursday, the government will issue its first of three estimates of economic activity, as measured by the gross domestic product, for the April-June quarter. So dizzying was the contraction last quarter that most analysts expect the economy to manage a sharp bounce-back in the current July-September quarter, perhaps as much as 17% or higher on an annual basis. Yet with the rate of confirmed coronavirus cases now rising in a majority of states, more businesses being forced to pull back on re-openings and the Republican Senate proposing to scale back the government’s aid to the unemployed, the economy could worsen in the months ahead.
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Consumer Bankruptcy
Business Reorganization
Covid19
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Liability Shield Fight Threatens to Blow Up Relief Talks

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A sharp disagreement over whether to provide coronavirus liability protections to businesses, schools and other organizations has quickly emerged as one of the biggest obstacles to getting a deal on COVID-19 relief legislation, The Hill reported. Both sides are digging in, with Senate Majority Leader McConnell (R-Ky.) and Democratic leaders — Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Charles Schumer (N.Y.) — calling the issue a looming dealbreaker. Not only is the disagreement standing in the way of passing the first major coronavirus package since late March, it’s also pitting key Republican and Democratic constituencies against each other: the business community versus unions and trial lawyers. Negotiations between the White House and congressional Democrats stalled this week largely because of the standoff over the liability shield in the GOP’s coronavirus package unveiled Monday. White House chief of staff Mark Meadows told reporters after Wednesday’s talks that Pelosi and Schumer “don’t appear to be in a negotiating mood.” A day earlier, McConnell declared he will not bring coronavirus relief legislation to the Senate floor unless it includes liability protections crafted by Sen. John Cornyn (R-Texas), an influential member of the Judiciary Committee.
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Legislation
Covid19
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Lawmakers Said Aviation Companies Laid Off Workers Even as They Took CARES Act Funds

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Democratic lawmakers have launched an investigation into whether four aviation contractors violated provisions of the CARES Act by laying off thousands of workers, despite receiving millions of dollars from the government to keep workers on the job, The Washington Post reported. An analysis by the House Select Subcommittee on the Coronavirus Crisis found that more than $500 million in federal funds went to four companies that have laid off more than 7,500 workers. On Wednesday, lawmakers sent letters to the companies, including three that provide catering services to airlines: Flying Food Fare, Gate Gourmet and Swissport. A fourth, G2 Secure Staff, provides services to airports including baggage handling, wheelchair assistance and pre-departure screening, according to its website. “Congress created this program to ‘preserve aviation jobs’ by providing wage assistance to companies in exchange for keeping workers on the payroll,” lawmakers wrote. “Giving payroll support to companies that engaged in mass layoffs is not only contrary to congressional intent, but also wastes taxpayer dollars by covering the cost of payroll for employees that have already been laid off.” The lawmakers also are asking companies to provide information about their dealings with the Treasury Department, including whether company officials informed the government about layoffs that occurred between when an application for aid was submitted and when a final agreement was signed.
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Airlines
Covid19
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Federal Reserve Leaves Rates Near Zero as Economic Recovery Sputters

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The Federal Reserve left interest rates near zero and Jerome H. Powell, the Fed chair, predicted a long road ahead as a recent spike in virus cases saps momentum from the nascent economic recovery, The New York Times reported. “The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in keeping the virus in check,” Mr. Powell said, noting that infections have surged since late June and the “pace of recovery looks like it has slowed.” Powell said policymakers needed more data before drawing firm conclusions about the scope of the pullback, but he noted that debit and credit card spending were slowing and labor market indicators suggested that recent job gains might be weakening. More than 14 million people who held jobs in February are no longer employed, Powell said, warning that it will take a while for workers in certain industries, like restaurants, hotels and travel, to find new jobs. The labor market rebound “is going to take a while,” he said, and “we’re going to be there for all of that.” While the Fed took no major actions, Powell’s comments underlined both the peril ahead for American workers and the reality that interest rates are likely to be very low — making money cheap to borrow — for an extended period of time. Stock prices climbed following his remarks as investors took heart in the Fed’s patient stance. Ahead of Powell’s comments, the central bank reiterated in its post-meeting statement that the Fed would keep low rates in place “until it is confident that the economy has weathered recent events.” The Fed’s announcement came as another round of tense negotiations continued in Congress over providing more support to workers and businesses still struggling amid the pandemic, including whether to extend an extra $600 per week in unemployment benefits that is set to expire this week.
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Covid19
Finance and Banking
Investment Banking
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$1 Trillion Stimulus Package Would Compensate Businesses for ‘Vandalism or Looting Due to Public Disturbances'

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Republican lawmakers proposed a $1 trillion coronavirus relief package, dubbed the HEALS Act, to address issues including small business loans and expanding jobless aid, but the legislation includes a detail that hasn't been as widely discussed: A bill that includes a provision to compensate businesses for "looting and vandalism due to public disturbances that occurred during 2020,” Business Insider reported. In short, the plan would extend Paycheck Protection Program loans to businesses for damages that occurred during protests that are not already covered by insurance. Since George Floyd's death at the knee of a police officer in May, protests have erupted in every state in the U.S., and many parts of the world. To the chagrin of many protesting systemic racism and police brutality, vandalism and theft have followed some of the protests. Small businesses have not been immune. In Atlanta, restaurant owner Derrick Hayes was left reeling when the windows of his restaurant were smashed. Hayes turned to GoFundMe to make up the losses, and since meeting his goals, is working on fundraising for other Black-owned businesses negatively affected by vandalism and theft. Still, the national conversation around protest and vandalism is fraught. 64% of Americans are sympathetic to protesters, but 79% say that property damage ultimately undermines their cause, according to a Reuters/Ipsos survey. This provision is part of a larger bill that would offer an additional $60 billion in forgivable loans to small businesses. It would allow employers to get a second Paycheck Protection loan, with a focus on businesses that are owned by people of color, reliant on seasonal revenues, or situated in low-income communities. The bill also expands paycheck protection program funds for personal protective equipment, testing, cleaning, and other expenses that make their establishments safer.
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Legislation
Covid19
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Americans Aren’t Making Babies, and That’s Bad for the Economy

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The COVID-19 pandemic spawned predictions that stay-at-home orders would eventually deliver a baby bump, yet far from having more children than usual, Americans are expecting fewer, Bloomberg reported. In bedrooms across the U.S., couples are making decisions that, in the aggregate, could prove as consequential for the long-term health of the economy as those taken by policymakers in Washington. Fewer children now means fewer consumers, workers and taxpayers in the future. In other words, a smaller economy than otherwise — though also a smaller environmental footprint, which brings its own rewards. Unromantic as it sounds, planning a family is a numbers exercise that factors in the age of the would-be mother, access to affordable child care, college costs, income, and job security. Toss in a national health emergency and an economic crisis that invites comparisons to the Great Depression, and the benefits of parenthood no longer pencil out for many. The Guttmacher Institute surveyed about 2,000 American women in late April and early May and found that 34% wanted to delay pregnancy or have fewer children as a result of the pandemic. That outweighed the 17% who said they wanted children sooner or more of them. In June, the Brookings Institution released a study predicting the U.S. is headed for “a large, lasting baby bust.” Its researchers forecast there will be 300,000 to 500,000 fewer children born in the U.S. in 2021 than there would have been absent the crisis, which amounts to a decrease of roughly 10% from 2019. That means the number of babies never born is likely to greatly exceed the number of Americans who’ve died from coronavirus, which is approaching 150,000. The effect on population will be longer-lasting as well: Many of the babies who aren’t being born would have lived into the 22nd century.
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Family/Divorce Issues
Covid19
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U.S. Renters Owe $21.5 Billion in Back Rent; Republicans Offer No Eviction Relief

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More than $21.5 billion in past-due rent is looming over Americans struggling to make ends meet, Stout, Risius and Ross estimated, as Republicans and Democrats fight over a new COVID-19 relief package, Reuters reported. Senate Republicans proposed a new plan that would not reinstate the recently-lapsed federal eviction ban, which carried a stay for rent due for one-third of renters. Adding to the strain, enhanced $600 weekly federal unemployment benefits are set to evaporate this Friday. Without a solution soon, the likely result “will be a staggering surge in homelessness unlike anything we have seen,” said John Pollock, a Public Justice Center attorney and coordinator of the National Coalition for a Civil Right to Counsel (NCCRC), which helped develop the eviction tracking tool with Stout, Risius and Ross. The unprecedented amount of back rent is not a macro-economic game changer, said Moody’s Analytics Chief Economist Mark Zandi. But for renters, “it’s catastrophic. Very few people will be able to pay this back,” he said. A debt spiral could haunt displaced tenants “for a lifetime,” he added. On Friday, the eviction ban that covered the third of renters in buildings with mortgages backed by the federal government lapsed. The rent deferred over four months is now due, as is all the rent where local and state moratoria on evictions have also ended.
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Consumer Debt
Covid19
Real Estate
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Holiday Shopping Is Changing Amid COVID-19 with Best Buy, Kohl's, Walmart, Target Closed Thanksgiving

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Thanksgiving is still four months away but retailers are preparing for a different holiday shopping season amid the coronavirus pandemic, USA Today reported. For years, Thanksgiving and Black Friday have marked the official kickoff to the holiday shopping season and the time of year when shoppers get focused on holiday spending. Enter 2020 and the pandemic. Some of the nation's largest retailers, who usually share holiday plans starting in October, have announced they are breaking with recent tradition and will close on Thanksgiving. Walmart kicked off the Thanksgiving closure announcements, with Target and Dick's Sporting Goods making similar declarations. Best Buy joined the list saying the holiday season is "going to look different." Kohl's announced that its stores would be closed on the holiday, too. Neil Saunders, managing director of Global Data, said he expects more stores will soon announce holiday closings. "Under present conditions, the idea of any retailer driving crowds of people into their store is a non-starter," Saunders said. "No retailer can run the risk of overcrowding and so all will be looking to balance the need to drive sales with the need to keep people safe."
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Covid19
Retail
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