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Virus Closures Further Delay 24 Hour Fitness’ Bankruptcy Loan

Submitted by ckanon@abi.org on
24 Hour Fitness Worldwide Inc. needs another week to negotiate bankruptcy financing in light of ongoing orders from California to keep gyms closed in the wake of the coronavirus pandemic, Bloomberg Law reported. The San Ramon, Calif.-based company has been “working very hard on our budget” and has gotten an extension from lenders on financing milestones. Judge Karen B. Owens delayed a decision on the company’s request for a $250 million bankruptcy loan, a day after California Gov. Gavin Newsom ordered gyms to close down again in response to a rise in COVID-19 cases. The fitness chain filed for Chapter 11 in June after the pandemic forced it to close its clubs nationwide in mid-March. Landlords for about a dozen 24 Hour Fitness locations in California complained that the bankrupt gym is behind in payments to third-party vendors, who are now threatening to put liens on the properties. The case is In re 24 Hour Fitness Worldwide Inc., Bankr. D. Del., No. 20-11558.
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Business Reorganization
Covid19
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Commentary: Our Next Stimulus Deal Could Cause a Massive Stock Market Crash

Submitted by ckanon@abi.org on
When COVID-19 first took hold back in March, the stock market reacted almost instantly, plunging into bear market territory for the first time in over a decade, The Motley Fool reported. But stock values have recovered nicely since then, to the point where you almost wouldn't think we're in a recession. When we look at factors like unemployment, however, the numbers tell a very different story. In fact, it's because of rampant joblessness, among other economic factors, that lawmakers are currently in the process of debating a second stimulus package. In March, the CARES Act was passed to provide COVID-19 relief, and it included a number of key provisions, including boosted unemployment and direct $1,200 stimulus payments to eligible Americans. But boosted unemployment is set to expire at the end of July, and many of those who received their stimulus cash earlier in the year have spent it. As such, Americans are desperate for added relief, and if it doesn't come through in a generous-enough fashion, it could drive the stock market into another plunge. If you were to look at the stock market's performance alone over the past few months, you almost wouldn't know that the country is grappling with a widespread financial crisis. But investors shouldn't assume stock values will stay high forever. As we saw back in March, bad news on the COVID-19 front could easily cause stocks to plummet, and if a follow-up stimulus deal is overwhelmingly disappointing, the market could react similarly. What would a disappointing stimulus deal entail? For the millions of jobless Americans, it means no unemployment boost or a boost that's far less substantial than the extra $600 a week jobless folks have been getting over the past few months.
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Covid19
Investment Banking
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Trump to Discuss Energy, Tour Oil Rig, Raise Money in Texas

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President Donald Trump will shift his focus to American energy dominance during a stop in Texas later this week that will include his first visit to an oil rig, the Associated Press reported. During the stop Wednesday at Double Eagle Energy in Midland, Texas, President Trump will discuss how the U.S. is achieving energy dominance by cutting regulations, simplifying permitting and encouraging private investment in energy infrastructure. He will also tour an oil rig in Midland. It will be Trump’s 16th visit as president to Texas. Double Eagle Energy says that it is one of the largest operators in the Permian Basin, covering parts of western Texas and southeastern New Mexico. The White House said Trump has taken steps to help the energy industry recover after the coronavirus outbreak caused demand for energy — and prices — to plummet as people stayed home to avoid becoming infected.
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Business Reorganization
Covid19
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U.S. Shale Oil Production May Take Years to Recover from COVID-19 Demand Slump

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U.S. shale oil production has dropped since mid-March, with energy demand hit by the coronavirus pandemic and domestic producers potentially cutting this year’s capital expenditures by around half, leading to expectations that output may not fully recover for years, MarketWatch.com reported. David Grumhaus, co-CIO at Duff & Phelps Investment Management estimates that U.S. onshore oil production has fallen by roughly 20 percent, or 2 million barrels per day since March, and is unlikely to see a big rebound “in the near or medium term.” Shale operators are facing a mountain of debt that comes due soon, according to Rene Santos, manager of North America supply, analytics at S&P Global Platts. Around 24 oil companies have also filed for Chapter 11 bankruptcy so far this year and the count is “likely to continue to increase.” U.S. horizontal oil rigs, those that drill shale wells, have declined by 75% since mid-March and the “short-term outlook is negative,” says Santos. Even if WTI oil climbs back to pre-COVID-19 levels of around $50 and operators start to increase rigs at that level, he says that would not change the shale oil outlook, as prices would need to see months of “stable higher prices,” and production would take months to react. Domestic shale production may recover somewhat in the next couple of months then decline again, pulling U.S. shale oil output down to 6.1 million barrels per day by year-end 2021, a 27 percent drop from March 2020, according to Santos.
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Business Reorganization
Covid19
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Opinion: Bankruptcy Law Changes Could Help Struggling Restaurants

Submitted by ckanon@abi.org on
Even in the best of times, tight margins and fixed expenses result in many new restaurants never seeing their first birthday, but restrictions on eat-in dining under stay-at-home orders instituted to combat COVID-19 have caused the profits of many restaurants to evaporate, while expenses remain, according to an opinion from Adam Fletcher published by Crain’s. While loans provided through the Paycheck Protection Program have been a temporary cash lifeline for some restaurants, they may not be sufficient to keep restaurants afloat in light of back rent and other expenses that continue to mount while revenues remain depressed as a result of continued social distancing measures. Confidence in the industry seems to be at an all-time low, with the Independent Restaurant Coalition estimating that 85% of independent restaurants could fold by the end of 2020. In the past, restaurateurs were often unable to use bankruptcy to save their businesses because, in a typical chapter 11, but two recent changes to federal bankruptcy laws now make it possible for owners of smaller or independently owned restaurants to restructure their debts in bankruptcy and maintain ownership of the business without having to pour in more capital.
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Covid19
Hospitality, Entertainment Venues and Gaming
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Investors Set Aside Coronavirus Worries, Driving a ‘Melt-Up’ in Markets

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Stocks, bonds and commodities are heading for their strongest simultaneous four-month rise on record, highlighting the breadth of the market recovery during the 2020 economic slowdown, The Wall Street Journal reported. Through Thursday, the S&P 500 and S&P GSCI commodities index were each up more than 25% since the end of March, while the Bloomberg Barclays U.S. Aggregate Bond Index added more than 3% in that span. If the gains hold during the final week of July, this would be the first time that the gauges all rose that much in a four-month period, according to a Dow Jones Market Data analysis going back to 1976. Investors and analysts attribute the broad rise in financial markets to faith in government and central-bank stimulus programs, hopes for vaccine development and wagers that the coronavirus crisis will spell opportunity for a number of large but nimble, well-placed companies at the expense of others whose struggles are deepening. The broad advance is prompting many investors who had been skeptical to pare back their cautious wagers and join the rally, giving it further fuel. Many portfolio managers believe the gains are justifiable, given expectations that economic conditions will improve and the success of policy makers in unfreezing debt markets whose functioning is crucial to American corporations.
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Covid19
Investment Banking
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States Brace for Changes to $600-a-Week Unemployment Benefits

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Congress is considering whether to extend or alter the extra $600 in weekly unemployment benefits for workers set to expire at the end of July, The Wall Street Journal reported. One looming question is how well overburdened state unemployment agencies would handle any change. Beyond simply extending the current payments, government officials have proposed shrinking the $600 to a lower flat payment or offering return-to-work bonuses to workers. Another idea would cap benefits at 100% of a worker’s previous income level, a response to the fact many workers are receiving more in benefits than their prior pay. The extra benefits payments — amounting to hundreds of billions of dollars since April — have helped support laid-off workers and the U.S. economy during the pandemic. Economists and state officials say some of the proposed changes, if implemented, could overwhelm an already overburdened system, making it even harder for workers to access aid. The extra weekly benefits are set to expire July 31, though lawmakers are considering a temporary extension while they continue negotiating over a longer term solution. Because of the way states process the payments, many workers may see a gap in payments if Congress doesn’t soon agree to at least a temporary extension.
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Covid19
Labor/Employment
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Senate Passes Bill to Prevent Debt Collectors from Garnishing Stimulus Checks

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The Senate passed bipartisan legislation that would protect coronavirus relief payments from being garnished by banks and debt collectors, The Hill reported. The Senate passed the bill by unanimous consent. Legislation that Congress passed in March, known as the CARES Act, authorized payments for most Americans of up to $1,200 per adult and $500 per child. The CARES Act prevented the payments from being reduced because of unpaid taxes or other debts owed to state and local governments. However, it did not prevent private debt collectors from garnishing the payments. The bill the Senate passed would protect the stimulus payments from being garnished by banks, similar to how Social Security payments are protected from garnishment. Senators urged the House to pass an identical version of the bill. The Senate bill cannot be sent directly to the House because it is a tax bill, but if the House passes an identical bill and sends it to the Senate, the measure could be passed in the Senate and sent to President Donald Trump. The Senate's passage of the bill comes as lawmakers and the White House are working on another coronavirus relief package. Both Republicans and Democrats are interested in including a second round of direct payments in that package.
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Consumer Debt
Covid19
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Kentucky Coal Operator Files for Bankruptcy Protection

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A coal operator headquartered in Kentucky, which bought assets from Blackjewel LLC after the company went bankrupt last year, has now filed for bankruptcy protection, the Associated Press reported. Rhino Resource Partners announced that they plan to sell all their assets and the assets of their subsidiaries to a bidder. Many of the company’s coal mining operations have been idled since March due to the coronavirus pandemic. This has led to a decline in revenue. The coal operator has nearly 550 employees in different states. The assets they purchased from Blackjewel last year include underground coal mines and a preparation plant in Virginia, the news outlet reported. Those assets were then placed under Jewell Valley Mining, a subsidiary of Rhino. When Blackjewel filed for chapter 11 last summer, it laid off workers with little notice and issued them bad checks. Coal miners in Kentucky protested the unpaid wages by blocking coal shipments.
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Business Reorganization
Covid19
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McConnell Announces 'in Principle' Agreement with Trump on New Coronavirus Relief

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The White House and Senate Republican leaders reached an agreement in principle for a fifth round of coronavirus relief, totaling about $1 trillion, including more direct payments to Americans and an extra $16 billion for testing, The Washington Times reported. Senate Republicans are expected to release various parts of the legislation Monday, facing an end-of-the-month deadline for the expiration of $600 weekly unemployment benefits that many Republicans call overly generous. “The administration has requested additional time to review the fine details, but we will be laying down the proposal next week,” said Senate Majority Leader Mitch McConnell (R-Ky.). President Donald Trump expressed disappointment that the plan won’t include his proposed payroll tax cut through the end of the year. “I think it’s great for the workers, [but] the Democrats would never have gone for it,” President Trump said. “They’re not big into the workers, I guess. We need their votes. You still need Democrat votes.” The president hailed a provision to spend $105 billion to help schools reopen safely during the pandemic, including mitigation such as smaller class sizes, masks and more teachers’ aides. The proposal will include a funding provision to allow parents to send their children to the school of their choice, including private or religious schools, if public schools don’t reopen.
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Legislation
Covid19
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