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As the pandemic persists, more and more companies have filed for bankruptcy protection, following in the footsteps of Hertz, J. Crew and Neiman Marcus. But financial restructuring advisers say that they expect filings to accelerate, according to a New York Times DealBook blog post. About 3,600 companies filed for chapter 11 in the first half of 2020, more than any year since 2012, according to the American Bankruptcy Institute. The past few weeks have brought filings by the fracking pioneer Chesapeake Energy, the Japanese home goods company Muji USA and the retailer New York & Company. But as to why cases dropped last month, Advisers cited the federal government’s programs for stabilizing the economy and credit markets, as well as efforts by companies to bolster their cash by drawing down their credit lines and issuing new bonds. (Businesses worldwide have sold $2.1 trillion worth of bonds so far this year, up 50 percent from the year before.) Earlier-than-expected reopenings have bolstered some businesses’ performance, allowing them to bring in some sales — critical to servicing their debts. Yet as coronavirus cases surge again, an uptick in filings may follow. The rise in infections brings the prospect of renewed lockdowns and shakes consumer confidence, testing companies’ abilities to survive another spell of little to no revenue. “We’re starting to see the pendulum swing back toward fear again,” William Hardie, a managing director in Houlihan Lokey’s financial restructuring group, told DealBook’s Michael de la Merced. And what comes next could be ugly. Many companies that saved themselves by borrowing more money are now in a bind: They have mortgaged nearly all their available assets, leaving little wiggle room.

The White House is insisting that Congress include a payroll tax cut as part of the next coronavirus stimulus package, potentially complicating talks with lawmakers by pushing a measure that President Trump has tried but failed to advance for almost a year, the Washington Post reported. “President Trump wants to provide relief to hard working Americans who have been impacted by this virus and one way of doing that is with a payroll tax holiday,” White House spokesman Judd Deere said in a statement. “He’s called on Congress to pass this before and he believes it must be part of any phase four package.” Trump’s renewed push for a payroll tax holiday comes as Senate Majority Leader Mitch McConnell (R-Ky.) prepares to unveil legislation next week that he hopes will launch negotiations on the next major coronavirus bill. Key Republican senators have been cool to the idea of a payroll tax cut in the past, partly because it only helps workers who are actually employed. Congress has rebuffed Trump’s previous demands for a payroll tax cut for individuals, instead approving a round of checks to individual Americans as part of the $2 trillion CARES Act in March.

Bondholders accused the bankrupt parent company of the Chuck E. Cheese children’s entertainment chain of trying to give too much control over its restructuring strategy to top lenders while scuttling a potentially superior alternative made by the bondholders, WSJ Pro Bankruptcy reported. In papers filed yesterday with the U.S. Bankruptcy Court in Houston, a group of unsecured bondholders led by Prudential Financial Inc. objected to the company’s request to spend its cash on hand and criticized several concessions demanded by secured lenders in exchange for their permission to use that cash. CEC Entertainment Inc., the parent of 741 Chuck E. Cheese and Peter Piper Pizza stores, filed for bankruptcy last month as the coronavirus pandemic shook its family-friendly business model. The company’s request for a final green light comes with provisions that would put the lenders in position to thwart any restructuring strategy that didn’t suit them, according to the bondholders’ objection. The bondholders said negotiations with the company shouldn’t be impeded by leverage grabs by lenders looking to take control of the business. CEC hasn’t outlined a clear path to exiting bankruptcy or proposed restructuring terms with either its lenders or bondholders.

Objections from dissenting creditors are threatening to delay Neiman Marcus’s bankruptcy restructuring after the group said an acceptable plan must preserve the right of minority stakeholders to pursue legal claims related to a 2018 asset transfer, Bloomberg News reported. The retailer asked U.S. Bankruptcy Judge David Jones to postpone a hearing on certain details of its plan to July 21 as it looks to address concerns from lower-ranking creditors. Neiman filed for chapter 11 protection on May 7 after striking an agreement to let senior creditors take control of the chain. But lower-ranking creditors say the court must first allow a full investigation into a controversial asset transfer that shifted value out of investors’ reach and lowered recovery values. The company’s plan, however, includes broad liability releases that would protect previous owners and directors, including Neiman’s private equity owners Ares Management Corp. and the Canadian Pension Plan Investment Board, from future claims. The lower-ranking creditors drew up their own restructuring plan, which differs from Neiman’s namely in its treatment of the future liabilities, and asked the court for permission to formally submit it as an alternative. The rescheduled hearing, which was originally set to take place on Friday, will include a response to that request, according to an agenda filed with the court.

Rep. Tom Rice (R-S.C.) introduced legislation yesterday that would provide a tax credit for businesses to safely reopen and pay for extra safety measures amid the coronavirus pandemic, The Hill reported. The Healthy Workplaces Tax Credit would provide a refundable tax credit against payroll taxes for 50 percent of the costs incurred by a business for COVID-19 testing, personal protective equipment (PPE), disinfecting, extra cleaning and reconfiguring work spaces to adhere to social distancing guidelines. The credit is limited to $1,000 per employee for a business’s first 500 employees, $750 per employee for the next 500 employees and $500 for each employee after that. For example, if a restaurant with 40 employees spends $60,000 on PPE, testing, disinfecting and plexiglass shields, it would receive a $30,000 tax credit against its payroll. The legislation is intended to encourage and enable businesses to take the recommended steps to prevent the spread of COVID-19 in their workplaces. Rice, who is on the House Ways and Means Committee, introduced the bill as an addition to legislation from Rep. Darin LaHood (R-Ill.) that would create a temporary tax credit to offset costs of cleaning.

Major U.S. bank executives this week said that they extended forbearance programs to millions of credit card, auto loan and mortgage customers who were financially hard hit by the coronavirus pandemic, Reuters reported. While that is good news for customers who need more time to pay their bills, the delays mean some of the largest U.S. banks may not know how many consumer loans have gone bad until the end of this year or early next. “Significant credit card losses won’t show up until 180 days past the end of (forbearance) programs,” Bank of America Chief Financial Officer Paul Donofrio said yesterday. “I would not expect to see significantly higher losses until 2021.” JPMorgan Chase & Co., Bank of America, Citigroup and Wells Fargo & Co. have all extended programs launched this spring that allow customers to delay payments on their credit card balances or loans without incurring late fees or hurting their credit. The four banks set aside $38 billion this quarter for loans that could go bad, according to Reuters calculations.