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Nearly Three-Quarters of Americans Believe Recession Will Last Until 2021

Submitted by ckanon@abi.org on
The U.S. officially entered a recession back in February, according to the National Bureau of Economic Research, but the stock market has been surging in recent weeks, USA Today reported. With many states reopening and millions of Americans going back to work, some people are hopeful that this means the economy is getting back on track. However, there has also been a huge spike in the number of COVID-19 cases since businesses started reopening, which doesn't bode well for Americans' health or the economy. New research also shows that the majority of Americans are pessimistic about the country's economic future. Nearly three-quarters (72%) of U.S. adults believe this recession will continue until at least next year, according to a recent survey from Simplywise.
Article Tags
Consumer Debt
Covid19
Labor/Employment
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Second Stimulus Payment Could Deliver Cash Even Faster

Submitted by ckanon@abi.org on
Congress is poised to approve a second round of stimulus payments for U.S. households, and money could reach many Americans faster this time, The Wall Street Journal reported. The Internal Revenue Service now has procedures, online tools, bank-account information and coordination with other agencies that it didn’t have set up in advance when the first round of payments was approved in the spring. Now it is up to Congress to approve the second round of payments, set all the details and send a bill to President Trump for his signature. That still could take weeks, but once that happens, money can start flowing. House Democrats passed a bill in May that would offer $1,200 per adult and $1,200 each for up to three dependents. It would also expand eligibility to groups that were excluded from the earlier round, including adult dependents, college-student dependents and households where some people are citizens but others aren’t. Senate Republicans and the Trump administration, meanwhile, want to repeat the first round of payments, Treasury Secretary Steven Mnuchin said. That means $1,200 per adult and $500 per dependent. The Senate Republican plan is likely to include payments for all dependents, not just the children eligible for the first round, said a person familiar with the proposal. The House and Senate plans would both start shrinking payments for individuals with incomes over $75,000 and married couples with incomes over $150,000.
Article Tags
Legislation
Consumer Debt
Covid19
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How the Child Care Crisis Will Distort the Economy for a Generation

Submitted by ckanon@abi.org on
Schools across the U.S. are closed. Parents are exhausted from  round-the-clock care while trying to work from home, and kids are slipping behind academically. Now comes the bad news: We haven’t seen the worst of it yet, Politico reported. When the economist Betsey Stevenson looks at the pandemic-era economic crisis, she sees a long-simmering child care crisis that has suddenly surged to the foreground of people’s lives — and whose true scope we’ve barely begun to reckon with. Its potential to inflict lasting damage to the economy is enormous, and it’s getting short shrift in the recovery plans coming out of Washington. “The work of recovering from it will not end just because we have a vaccine,” says Stevenson, a labor economist at the University of Michigan and former member of President Barack Obama’s Council of Economic Advisers. “We are making choices right now about where we will be as an economy in 20 years, in 30 years, based on what we do with these kids.” Among those most likely to be affected are working mothers, who shoulder an outsize share of child care responsibilities, and have suddenly had far more work dropped in their laps. Women already need to make difficult choices between work advancement and their family roles, which can bring down their incomes over time; Stevenson expects the crisis to make that conflict sharply worse: “The impact of the child care crisis on women’s outcomes is going to be felt over the next decade.”
Article Tags
Family/Divorce Issues
Covid19
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Brooks Brothers Starts Takeover Race with Sparc’s ‘Stalking-Horse’ Bid

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Brooks Brothers Inc. reached a deal with Sparc Group LLC — the venture created by Authentic Brands Group LLC and mall owner Simon Property Group Inc. — to sell the company for $305 million, The Wall Street Journal reported. Sparc’s offer will be subject to higher and better bids due by Aug. 5 and has been designated as the “stalking horse.” The company has set a deadline of Aug. 11 to complete a sale to a buyer. Sparc has also committed to keeping 125 of the company’s stores open. WHP Global Inc. is also preparing a bid for Brooks Brothers. Both Sparc and WHP Global have been expected to come forward to bid for Brooks Brothers. The two firms competed with each other to provide a bankruptcy loan to the retailer, a competition which Sparc won, with a $80 million loan. A third suitor has emerged since the iconic American company filed for bankruptcy. Milan-based Giglio Group SpA, which helps fashion companies improve online sales, is spearheading a group of investors who are interested in buying the company and turning it into an online-only retailer. If successful, Giglio plans to install Italian managers with fashion-industry experience and close stores to free up funds to invest in digital. Brooks Brothers’ three U.S. factories, which are slated to close next month, would remain open and overseas production would be consolidated in Italy.
Article Tags
Covid19
Retail
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Shale Lenders in Retreat After Decade That Fueled Oil Boom

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One of the key sources of funding for American shale is evaporating, just as the sector needs it more than ever, Bloomberg reported. Banks lending against the oil and natural gas reserves of hundreds of independent U.S. drilling companies have pulled back from the sector at an unprecedented rate this year after energy prices slumped. There’s every indication they’re not done: Many in the industry expect further reductions to credit facilities in the fall, with higher costs and more stringent protections for lenders. All that comes at a time that could scarcely be more challenging for shale. Weakened by poor returns to shareholders, it was getting shut out of the bond and equity markets even before the COVID-19 pandemic decimated global demand. With crude prices staging a limited recovery in the last two months to around $40 a barrel, shale operators face an uncertain future, one where they must drill to generate cash flow while facing a higher cost of capital. Shale lending doesn’t just involve banking behemoths. but smaller regional entities. Shale companies negotiate their credit lines in spring and again in fall. Any adjustments are typically modest, but banks slashed many loans this spring. According to S&P Global Ratings, borrowing bases, which are determined by the collateral value of oil and gas reserves, were reduced by an average of 23%. Credit commitments were lowered by 15% on average.
Article Tags
Business Reorganization
Covid19
Investment Banking
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Gold Prices Set to Smash Record as Wall Street Shuns the Dollar

Submitted by ckanon@abi.org on
The COVID-19 pandemic has pushed the price of gold to a hair’s whisker of its record high reached almost a decade ago, Forbes reported. Investors should expect the rally to continue beyond that level, at least in the medium term, experts say. “We continue to be bullish on gold, believe that gold will make a new all- time high in US$, and that gold will make new all-time highs in all currencies,” states a recent report from Wolfe Research. The price of gold recently traded around $1,893 a troy ounce, putting it within easy reach of its all-time high of around $1,920 reached in 2011 in the wake of the financial crisis. So far this year investors in the SPDR Gold Shares (GLD) exchange-traded fund, which holds bars of solid bullion, has rallied 24%. That far exceeds the 0.34% increase in the SPDR S&P 500 (SPY) ETF which tracks the S&P 500. Both figures are from Yahoo and exclude dividends for the S&P 500 fund.
Article Tags
Covid19
Finance and Banking
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Job Losses Continue to Mount in Texas Oil Patch

Submitted by ckanon@abi.org on
An industry downturn caused by the coronavirus pandemic continues to take its toll on the Texas oil patch where another 446 people have lost their jobs over the past week and 537 more could be out of work if their employer cannot sort out bankruptcy issues, the Houston Chronicle reported. An industry downturn caused by the coronavirus pandemic continues to take its toll on the Texas oil patch where another 446 people have lost their jobs over the past week and 537 more could be out of work if their employer cannot sort out bankruptcy issues. Houston oil field equipment maker Exterran is laying off 174 people at its compression fabrication services off Brittmoore Road in two rounds of layoffs that will take place in August and October, the company told the Texas Workforce Commission in a notice made public Thursday.
Article Tags
Business Reorganization
Covid19
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Journal Issue
Sept 2020
Bankruptcy Code
none
Bankruptcy Rule
Topic Tags
Creditors' Committee
Financial Advisors
Practice and Procedure
Covid19
Finance and Banking
Health Care
Insurance
Investment Banking
Real Estate
Turnaround Issues

Flashpoints Emerge as Lawmakers Negotiate New Virus Aid

Submitted by ckanon@abi.org on
Bipartisan Capitol Hill talks have only just begun on a sweeping renewal of coronavirus legislation, but areas of likely agreement — and flashpoints of discord — are becoming apparent as the package starts to take shape, the Associated Press reported. The Democratic House passed a whopping $3.5 trillion coronavirus response bill more than two months ago, re-upping a $600 per week federal unemployment benefit that expires July 31, another round of $1,200 payments to most people, and almost $1 trillion for cash-starved states and local governments. The GOP’s $1 trillion-plus response, expected shortly, will have far less money and will feature a sweeping liability shield for schools, businesses, and charities that are trying to reopen. It’s up to top congressional leaders to bridge the gaps. The article details aspects that are likely to be in the final bill.
Article Tags
Legislation
Covid19
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Opinion: The One Change That Could Save Your Neighborhood Stores

Submitted by ckanon@abi.org on
For the typical small business, rent is an enormous expense, second only to payroll — and there’s no blueprint for how small-business owners should deal with their landlords during an economy-toppling pandemic, according to an op-ed in The New York Times. Here’s one option: Ignore your landlord and plan on resuming rent payments when sales hopefully improve, and try to not get evicted in the meantime. Another option? Stay current on rent and pray that the economy recovers before you run out of cash. Either way, small businesses are on the hook for making rent payments in full, even if the value of commercial space they lease greatly decreases. Entrepreneurs in hard-hit areas are at risk of losing not only their businesses but also their homes and savings. Large businesses benefit enormously from the flexibility afforded to them by bankruptcy law, but the Bankruptcy Code is not as friendly to small businesses. Chapter 11 was recently amended so that small businesses can stay alive even if their creditors aren’t paid in full — but these changes didn’t apply to landlords. This means a small business can’t remain in the same commercial space unless it pays everything owed under the lease, including all back rent. If owners are in deep enough trouble to file for bankruptcy, there’s a decent chance they don’t have the funds to pay this rent in full. One possible solution is for Congress to temporarily change bankruptcy law so that small businesses can be allowed to pay their landlords more reasonable amounts until the pandemic is behind us.
Article Tags
Covid19
Small Business
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