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An analysis shows that one in five U.S. households who rent their homes could face eviction by October as enhanced federal unemployment benefits and eviction moratoriums come to an end this summer, CBSNews.com reported. Already, thousands of eviction cases are pending in a number of states. Between 19 million and 23 million families that rent across the country are at risk of losing their homes by September 30, estimates the COVID-19 Eviction Defense Project, an advocacy group focused on the impact of the coronavirus pandemic on housing. Roughly 20 percent of renters — about 13 million people — told a Census Bureau survey last month they had missed their May rent payment. Cities and states where eviction moratoriums have ended have seen a jump in legal proceedings to eject people from their homes. In Milwaukee, where Wisconsin's moratorium ended on May 26, cases rose 15 percent in the last month, according to the Eviction Lab. About 12,000 eviction cases are pending in Virginia courts, according to the Virginian-Pilot. In North Carolina, about 10,000 eviction cases are in the works, the News & Observer noted. Moratoriums in both those states ended last month. To be sure, landlords need to receive income from rent to cover their own expenses, such as the cost of mortgages, building maintenance and property taxes. That's why advocates are arguing for federal assistance to help renters afford their bills, such as continuing the $600 in weekly unemployment benefits that have been added on to varying state unemployment payouts.

As states lift stay-at-home orders and gradually let businesses reopen, companies are gingerly allowing white-collar workers to return to office buildings even while weighing how much they really need the space, according to a USA Today commentary. About half of U.S. employees worked from home during the COVID-19 shutdowns, according to the Brookings Institution. And many companies — including Facebook, Google, Twitter and Morgan Stanley — plan to continue allowing at least some staffers to telework at least some of the time even after a vaccine is available and the health crisis is over. That could mean a seismic downsizing of the $2.5-trillion office market and the vibrant urban centers that have flourished around them, battering the restaurants, bars and high-end retailers that rely on white-collar workers’ lunch and after-work spending. “The genie is out of the bottle,” with many companies now embracing remote work, says Victor Calanog, head commercial real estate economics at Moody’s Analytics. And if there’s a major shift to telecommuting, “Do we really need that much office space?” To be sure, analysts don’t predict an abandonment of American offices. In fact, more office space could well be needed in the short term to accommodate social distancing requirements until a coronavirus vaccine is widely distributed, presumably next year. That could spark more leasing and construction activity in less-expensive suburbs. And over the long term, most companies likely will still want most workers in the office at least some of the time to promote collaboration and morale, some analysts say. “I don’t see a situation where offices completely die,” says Paul Leonard, managing consultant at CoStar, a commercial real estate research firm. But even a noticeable pullback in the U.S. office footprint could have a tangible impact on local economies, reducing city tax revenues, dampening office construction, increasing defaults on commercial loans (and thus hurting banks) and threatening nearby restaurants and shops, say Calanog and Mark Zandi, chief economist of Moody’s Analytics. Read more.

Occupancy issues are at the heart of many significant retail cases, as detailed in the ABI publication Retail and Office Bankruptcy: Landlord/Tenant Rights, available at the ABI Store. 

Mexico’s Interjet said yesterday that it received a $150 million capital injection to help the company through a major restructuring in a bid to offset the crisis in the airline sector as the coronavirus pandemic choked global travel, Reuters reported. Interjet, one of Mexico’s three biggest airlines with a portfolio of more than 50 routes, announced restructure plans last month as local media speculated about the carrier’s financial health. The struggling Mexican airline said a group of investors, headed by businessmen Carlos Cabal and Alejandro del Valle, has injected capital to help shore up the company. Rival Aeromexico has already filed for chapter 11 bankruptcy proceedings.

Even as the coronavirus pandemic battered the economy, forcing tens of millions of workers to file for unemployment and shuttering businesses large and small, a surprising trend emerged: The number of people filing for personal bankruptcy plunged, YahooFinance reported. In April, consumer bankruptcies dropped 47 percent from the same month last year, while May filings were down 43 percent year over year, according to the American Bankruptcy Institute. For the first half of the year, bankruptcies were 24 percent lower than the first six months of last year. Experts pointed to numerous factors for the slowdown. Courts and attorneys’ offices remained closed during state shutdowns. Evictions and foreclosures — often precursors to bankruptcy because people want to save their homes — were put on hold. Generous government support and forgiving creditors also kept many from falling into financial distress. Last, those on the brink of bankruptcy before the pandemic had more pressing issues to deal with. “People’s mental inboxes are full,” Professor Robert Lawless at the University of Illinois College of Law, who specializes in bankruptcy, consumer finance and business law, told Yahoo Money. “There are a lot of things to sort out in their lives — going to see a bankruptcy lawyer has been pushed further down on the to-do list for understandable reasons. I think that was a big part in the early days and weeks of the pandemic.” But the reprieve may be short-lived as the economy sputters, stopping and going as new COVID-19 outbreaks pop up, and as many of the temporary layoffs morph into permanent ones. “As government lifelines to help stabilize the economy begin to expire, bankruptcy provides a shield for households and companies facing intensifying financial distress,” ABI Executive Director Amy Quackenboss said in a statement earlier this week, announcing the half-year bankruptcy statistics. “We anticipate filings to begin increasing as a result.” Lawless’s past research on bankruptcies shows that people take time to choose bankruptcy, typically struggling through financial difficulties between two to five years before filing. Oftentimes, they are finally persuaded after a creditor sues them.

White House economic adviser Larry Kudlow said on Friday that a further round of economic impact payments to Americans should focus on those who no longer have a job to return to, saying the next coronavirus relief bill should be “tighter” than previous efforts, Reuters reported. “The key now is helping folks get back to work,” Kudlow added. “We’ll have some unemployment reforms. We’ll have some re-employment bonuses. We will have some additional economic impact assistance in a targeted way.” “I think it’s going to be a tighter bill. We can’t keep posting $3, $4 trillion every three months or every two months,” he said. The Trump administration and lawmakers are expected to soon re-engage in negotiations aimed at producing a bill for President Donald Trump to sign by the end of the month. Read more. 

In related news, Democratic House Speaker Nancy Pelosi said yesterday that she believes U.S. lawmakers can find a compromise on extending jobless benefits and unemployment insurance for Americans struggling amid coronavirus pandemic shutdowns, Reuters reported. “We have to find a compromise because we must extend it,” Pelosi said. The top Republican in the U.S. House of Representatives has said it would not be productive to extend the extra unemployment benefits that were included in coronavirus relief legislation earlier this year. The benefits expire on July 31. Minority Leader Kevin McCarthy and other Republicans point to statistics showing many Americans receive more money from the extended unemployment benefits than they earned when they were at work. Republicans and Democrats have been debating how to help the country recover from the economic effects of the novel coronavirus, which led to business closures that have thrown tens of millions of Americans out of work. The loss of the safety net of $600 per week payments to laid off workers looms well before a sustained recovery is likely to take hold from the sudden and deep recession brought by the coronavirus, which has infected nearly 3 million Americans. Read more. 

Apex Linen Service LLC, a private-equity-backed provider of dry cleaning and laundry services to Las Vegas hotels and casinos, has filed for bankruptcy, blaming the havoc that the coronavirus pandemic has created in the travel business, WSJ Pro Bankruptcy reported. “The sharp decline in tourism due to the closure of Las Vegas hotels and casinos for months caused a precipitous drop in demand” for the laundering of bed linens, towels and employee uniforms, and for guest dry cleaning, Apex Managing Member Chris Bryan said on Thursday in a court filing. As a result, Apex, which had $21.3 million in revenue last year, temporarily shut down operations. The fallout from COVID-19 constrained the company’s liquidity and caused defaults under its lending agreements, Apex lawyer Harley Goldstein told The Wall Street Journal. Apex and its lenders began discussions as the liquidity crisis worsened, but weren’t able to reach consensus, prompting the chapter 11 filing in U.S. Bankruptcy Court in Wilmington, Del., said Mr. Goldstein, of the law firm Goldstein & McClintock LLLP. The company, which restarted operations as Las Vegas hotels have begun reopening, expects to reorganize and continue serving customers in an improved economy, Goldstein said. Apex entered bankruptcy with about $200,000 in cash on hand. The company expects to arrange additional funding shortly to help it get through bankruptcy, and alternatives for its leaving bankruptcy, such as a sale or debt-for-equity swap, are also being discussed, Goldstein said.

Sur La Table Inc. received bankruptcy-court approval to conduct a speedy chapter 11 sale process, positioning the kitchen-supply retailer to sell itself by next month after receiving an offer valued at $61 million from Fortress Investment Group LLC, the Wall Street Journal reported. Fortress, which has teamed up with investment firm Story3 Capital Partners, agreed to serve as the stalking horse bidder to acquire at least 40 but as many as 70 Sur La Table retail stores, in addition to its online business, cooking classes, inventory and the assumption of $20 million in gift cards and other liabilities. The Seattle-based company, which sells high-end cookware and offers gourmet-cooking classes at its stores, is aiming to close a potential expedited sale by mid-August. Sur La Table filed for chapter 11 bankruptcy protection on Wednesday with plans to conduct liquidation sales at 51 stores. Bankruptcy Judge Michael B. Kaplan said that he would approve the bidding rules that will subject the Fortress buyout offer to other bids at a bankruptcy auction, if needed. The deadline to submit qualified bids is Aug. 3. If necessary, an auction will be conducted on Aug. 5.

Hi-Crush Inc., a supplier of sand used in fracking, is the latest company in the oil and gas sector to be pushed into bankruptcy by low crude prices and the disruption from the coronavirus pandemic that has roiled the energy industry, the Wall Street Journal reported. Hi-Crush filed for chapter 11 protection yesterday in the U.S. Bankruptcy Court in Houston. The filing comes weeks after the Houston-based company disclosed it was negotiating terms of a bankruptcy filing with its key creditors. Publicly traded Hi-Crush said last month in a regulatory filing that during the first quarter of 2020 it “faced a sharp and rapid decline, which was driven by a decrease in crude oil prices and overall oil field activity” primarily due to an oil price war between Russia and Saudi Arabia. Hi-Crush also said it was hurt by falling demand for oil because of the COVID-19 pandemic. Hi-Crush said in a regulatory filing it has taken several steps to preserve its cash and cut costs, including cutting its expected capital spending for the year by 40 percent and laying off about 60 percent of its workforce.

Governments around the globe are struggling to figure out how much leeway they should allow for what economists call creative destruction — when outmoded companies and practices get replaced with new and more productive ones, according to a Bloomberg commentary. The argument against letting those forces loose right now is that firms with decent prospects of bouncing back, once the health emergency is over, will get swept away too. In the U.S., historically more willing to let creative destruction take its course, there’s concern that unemployment may get stuck at the current high levels while bankruptcy courts clog up, according to the commentary. “We don’t want to have failures occur all at the same time because that’s catastrophic for the economy,” said former Federal Reserve Bank of New York President William Dudley, who is now a senior research scholar at Princeton University and a Bloomberg Opinion columnist. “It’s fine to have individual firms fail from time to time, but systemic failure imposes so much cost on everyone else.” The right balance of preservation and reinvention will depend on things that are unknowable now, from the duration of the COVID-19 shock to whether changed consumer habits will prove durable. For now, policy makers are erring on the side of blanket support, even if some of the companies that get it turn out to be unviable.“The idea that we can know with any kind of clarity who is solvent at this point, or who is going to be solvent, is really a stretch,” said Jeremy Stein, a Harvard professor and former Federal Reserve governor. That could make what Stein called America’s “bias toward indiscriminate liquidation” of smaller firms a problem, rather than a benefit for the post-virus economy.