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Law firms have been relieved that the COVID-19 pandemic has not been as financially catastrophic for the industry as predicted in March, but the coming months will bring more uncertainty for firms and the broader economy as Paycheck Protection Program loans run out and coronavirus cases continue to rise in the U.S., the American Lawyer reported. The PPP, intended to cover salaries for up to two and a half months, disbursed most of its funding in April. More than 1,500 law firms across the United States received PPP loans, and at least 47 firms in the Am Law 200 received loans totaling between $218 million and $445 million, according to data released by the Small Business Administration, which administers the program. Nearly two months after most loans were disbursed, though, firm leaders and legal observers now say firms aren’t out of the woods yet. “There’s still substantial uncertainty around the ‘second wave’ and the long-term economic impact,” said Sullivan & Worcester managing partner Joel Carpenter. “Supplemental unemployment is up at the end of the month. We’re cautiously optimistic, but we still don’t know where all this is going to take us.”

Apparel brand Brooks Brothers filed for chapter 11 yesterday, joining a list of decades-old American retailers that have crumbled under the impact of the coronavirus crisis, Reuters reported. The 200-year old apparel retailer said that its strategic review process was still underway and the bankruptcy filing would help it obtain additional financing to facilitate the sale. “During this strategic review, COVID-19 became immensely disruptive and took a toll on our business,” a company spokesperson said. Owned by Italian billionaire Claudio Del Vecchio, the privately held company boasts of having dressed 40 former U.S. presidents including John F. Kennedy and Barack Obama and has about 500 stores around the world, most of which had to be closed due to coronavirus-led restrictions. Brooks Brothers said it secured $75 million in debtor-in-possession financing and that, along with cash flows from ongoing operations, would give it liquidity to support it through the sale process. In a District of Delaware court filing, the company stated that it had assets and liabilities between $500 million and $1 billion.

Sur La Table Inc., the specialty retailer of high-end kitchen wares and cooking classes, filed for bankruptcy with plans that could result in a sale to affiliates of Fortress Investment Group, Bloomberg News reported. The company’s chapter 11 filing in New Jersey includes financing to keep Sur La Table in business and support from its existing lenders. The Seattle-based company listed assets and liabilities of as much as $500 million each in its bankruptcy petition. The chain closed its stores and canceled cooking classes across the country in March as the virus clamped down on commerce in the U.S., according to the company’s website. By July 4, 121 Sur La Table stores across the country reopened, according to Wednesday’s statement, which said some of its locations will be closed permanently. The bankruptcy plan calls for Fortress to act as a stalking-horse bidder. Fortress is working with STORY3 Capital Partners, the company said. Sur La Table traces its roots to Seattle’s Pike Place Market in 1972. It has grown from just 86 stores when Investcorp acquired it in 2011 for $146 million, according to a filing and statement at the time.

J.C. Penney turned its business plan in to lenders yesterday, meeting a deadline to have the document finished, but now it wants to extend the time it has left to negotiate its future, the Dallas Morning News reported. Lenders are required to decide by Tuesday whether the 118-year-old retailer will move forward as a restructured company. If not, the company’s assets will be sold off, and the current operation will go out of business. Penney wants to talk its lenders into believing it has a future after it exits bankruptcy later this year. The company has proposed that it be reorganized as two entities — a real estate investment trust, or REIT, that owns some of the property and a successor to the J.C. Penney operating company. Penney’s attorney Joshua Sussberg of Kirkland & Ellis said there has been progress in negotiations, not only with its lenders but also with potential buyers of Penney’s retail business and prospective investors in the REIT. “We’re going to need more time. Our conversations have been incredibly productive,” Sussberg told U.S. Bankruptcy Judge David Jones at a hearing Wednesday afternoon. “We believe we will come to an agreement and solution and avoid the outcome no one wants.” Sussberg also said Penney had started paying rent for June and July after the court allowed it to delay the payments until July 13. The business plan document isn’t public and wasn’t filed with the court but has been shared with lenders, creditors, the ad hoc equity committee and potential investors, Sussberg said.

United Airlines yesterday said that it is warning about 36,000 front-line employees — more than a third of its staff — about potential furloughs as the coronavirus pandemic continues to roil travel demand, CNBC.com reported. The potential for the mass job cuts, the largest announced by a U.S. airline so far, comes as signs of a recovery in air travel fade with new coronavirus infections and travel restrictions. Other airlines have warned employees about possible staff reductions and are likely to follow suit with similar formal notices in the coming weeks. Federal law requires employers to give staff notice about possible layoffs or temporary furloughs 60 days in advance. United and other airlines that took $25 billion in federal payroll support are prohibited from laying off, furloughing or cutting the pay rates of staff until Oct. 1. In a memo sent to employees Wednesday, United said workers who are informed that their jobs are at risk might not ultimately get furloughed. The company said it will exhaust voluntary measures before cutting employees. Some of the furloughed staff may be called back to work but that will depend on a return to demand, which some industry executives say could take years. 

The Federal Reserve Bank of Boston yesterday released a list of lenders that have signed up for the central bank’s midsize-business lending program and are willing to make loans to new customers through the initiative. Noticeably absent are most of the nation’s biggest banks, the New York Times reported. Only Bank of America has so far agreed to participate and take on new clients, based on the Boston Fed’s release, while lenders like JPMorgan Chase, Citigroup and Wells Fargo are not listed. Only about 90 banks agreed to publicly say they are willing to lend to new customers and were listed. Most states have only a handful of such lenders, with seven listed in California and nine in New York, based on the Boston Fed’s release. Banks can also participate in the program by making loans to existing clients. While thousands of banks are eligible to sign up, about 400 have registered or were in the process of doing so as of Wednesday, the Boston Fed said. The Fed has not released a full list of all banks participating in the program. The Fed’s midsize-business initiative, called the Main Street Lending Program, opened for lender registration in June and became fully operational on Monday. The Fed first said that it would set up a Main Street option in late March, but it had never tried to support midsize businesses before, and Chair Jerome H. Powell has said designing the program was a challenge. Even after multiple revisions, thousands of comments and extensive congressional grilling, it remains unclear how extensively the program will be used. Many lenders report that they are hearing of only limited borrower interest in the program.

Federal Reserve officials raised fresh doubts yesterday about the durability of the U.S. recovery, while new business surveys highlighted developing risks from the relentless coronavirus pandemic, Reuters reported. In separate appearances, Atlanta Fed President Raphael Bostic, Boston Fed President Eric Rosengren and Richmond Fed President Thomas Barkin noted what Barkin characterized as “air pockets” facing the U.S. economy — businesses exhausting existing order books without refilling them, and households facing the end of unemployment benefits and other support. “Businesses like construction had pretty good pipelines and kept going,” through the first phase of the pandemic Barkin said. But, “new orders are not coming on line in the same way. We have fiscal payments ... that are coming to an end and it is not clear what is going to replace them.” Enhanced unemployment benefits that have proved key to replacing spendable income amid record setting unemployment are due to expire this month. Facing that “fiscal cliff,” the economy is also grappling with a surge of COVID-19 cases to record levels. Not all Fed officials are gloomy. St. Louis Fed President James Bullard said that he felt that face masks will become “ubiquitous” to tame the pandemic, and many lost jobs will be regained by year’s end. But Bullard may be the outlier among his colleagues at the central bank. “I do expect unfortunately that the economy is going to remain weaker than many had hoped through the summer and fall,” Rosengren said.

Technology startups have been laying off tens of thousands of workers to cope with the economic fallout of the coronavirus pandemic, potentially blunting a key innovation pipeline for the enterprise information-technology market, according to industry analysts, the Wall Street Journal reported. Max Azaham, a senior research director at research and consulting firm Gartner Inc., said that the coronavirus has made startup investors far more risk averse, resulting in a sharp downturn in investment capital for IT companies looking to raise less than $100 million. As of last week, nearly 70,000 tech-startup employees world-wide had lost jobs since March, led by ventures in the transportation, financial and travel sectors, according to a report by U.K.-based brokerage BuyShares.co.uk. Startups in the San Francisco region, including Silicon Valley, have shed more than 25,500 jobs, including layoffs at high-profile companies such as Uber Technologies Inc., Groupon Inc. and Airbnb Inc., the report said. Uber in May announced more than 6,500 layoffs, cutting roughly a quarter of its workforce. A month earlier, Lyft Inc. said it would cut about 17 percent of its workforce, furlough workers and slash pay in cost-cutting efforts to cope with lost sales during the coronavirus pandemic.

DavidsTea is seeking court protection from creditors so it can continue operating while it restructures and plans to close a significant number of its stores, the Globe and Mail reported. The Montreal-based company said today that it will seek an order in Quebec Superior Court to allow it to restructure under the Companies’ Creditors Arrangement Act. It also plans to seek similar orders for its U.S. subsidiary under chapter 15 of the U.S. Bankruptcy Code. The company said during the restructuring process it plans to continue operating online through davidstea.com and its wholesale distribution channel, which supplies grocery stores and pharmacies. The chain’s stores have been shut since March 17 due to the COVID-19 pandemic. “The transformation of our business model is necessary to position the company for a return to profitability,” chief financial officer Frank Zitella said in a statement. “DavidsTea has experienced a multi-year decline in brick and mortar sales and the post COVID-19 retail environment creates significant challenges for our unique in-store customer experience.” It had warned in mid-June that it hadn’t paid rent on any of its stores for April, May and June and that it may seek a formal restructuring.