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The parent of New York & Co. is preparing for a bankruptcy filing that would include plans to shut all of the discount apparel chain’s stores, Bloomberg News reported. RTW Retailwinds Inc., which also owns Fashion to Figure and Happy x Nature, warned earlier this month that a bankruptcy filing was probable, citing a loan default, and said that it could close a significant portion, if not all, of its 387 stores. Founded more than a century ago as Lerner Shops, the company changed its name to New York & Co. in the late 1990s and became a mall mainstay, teaming up with celebrities like Eva Mendes and Kate Hudson. The company’s former president and chief marketing and customer officer, Traci Inglis, said in March that it was time to transition to a “digitally-dominant” brand. But the pandemic forced all its stores to temporarily close the same month, according to the company’s annual report, making it impossible to turn around what RTW called substantial and recurring losses from operations. Some stores began to re-open in the first week of June. To deal with the cash crunch, RTW didn’t pay vendors and withheld April and May rent to its landlords, leading to a flurry of default notices, the company said. What’s more, the store closings cut into inventory values and other assets. Bankers at Wells Fargo & Co. gave the company until June 30 to make good on its defaulted loan.

Toledo-based table glassware company Libbey Inc., which filed for chapter 11 protection earlier this month, on Friday reported a first quarter loss of $78.7 million, the Toledo Blade reported. A year ago, the company reported a first quarter loss of $4.5 million. The company, which had delayed reporting its first quarter results due to the bankruptcy, pointed to a large drop in demand for glassware from the restaurant industry due to coronavirus lockdowns and restrictions. Net sales for the quarter fell to $151.1 million, a drop of 16 percent from $175.6 million in the first quarter of 2019. Libbey's US & Canada and Latin America markets saw 12.8 percent and 12.4 percent drops, respectively, in net sales compared to last year.

Grupo Aeromexico SAB is considering a chapter 11 filing in the U.S. as the coronavirus pandemic ravages the airline industry, Bloomberg News reported. The Mexican carrier is weighing its options and no final decision has been made. The company is working to coordinate with creditors on a restructuring, and is considering all the alternatives. An Aeromexico bankruptcy would be the third in six weeks by a major Latin American airline, after Latam Airlines Group SA and Avianca Holdings SA sought court protection. Passenger traffic in the region fell by 96 percent in April amid the pandemic, according to the International Air Transport Association. But Latin American governments, unlike their counterparts in the U.S. and Europe, have been reluctant to offer support for airlines. Aeromexico said it hasn’t initiated or made a decision to initiate restructuring under chapter 11. “At this moment, we’re identifying additional sources of financing to strengthen our operative flows,” the company said in a securities filing Friday. “We’re also analyzing different alternatives to successfully reach, in the medium and long term, an orderly restructure of our financial commitments without disrupting operations.” Aeromexico is coordinating with unions, creditors and lessors, it said.

While companies large and small are already succumbing to the economic effects of the coronavirus, experts say the wave of bankruptcies is going to get bigger, the New York Times reported. Edward I. Altman, the creator of the Z score, a widely used method of predicting business failures, estimated that this year will easily set a record for so-called mega bankruptcies — filings by companies with $1 billion or more in debt. And he expects the number of merely large bankruptcies — at least $100 million — to challenge the record set the year after the 2008 economic crisis. Even a meaningful rebound in economic activity over the coming months won’t stop it, Altman said. More than 6,800 companies filed for chapter 11 bankruptcy protection last year, and this year will almost certainly have more. The flood of petitions from the worst economic downturn since the Great Depression could swamp the system, making it harder to save the companies that can be rescued, bankruptcy experts said. Without reform in the system, “we anticipate that a significant fraction of viable small businesses will be forced to liquidate, causing high and irreversible economic losses,” a group of academics said in a letter to Congress in May. Robert J. Keach, co-chair of ABI's Chapter 11 Reform Commission, said that many companies had so far managed to put off bankruptcy by amassing cash and conserving it as best they can: drawing down existing credit lines, furloughing workers, delaying projects and taking advantage of federal and state pandemic-relief programs. But when those programs expire, the companies will start burning through their cash. That’s when bankruptcy filings are likely to soar and stay elevated, Keach said. Expect “a Covid-19 cliff” in the next 30 to 60 days, he said.

A bankruptcy court in Illinois has ruled that the force majeure provision in a restaurant lease excuses the tenant’s obligation to pay full rent during the time a stay-at-home order was implemented to slow the spread of COVID-19, the Wall Street Journal reported. The ruling appears to be the first of its kind after widespread closures triggered dozens of lawsuits across the country over missed rent payments. The legal concept was raised by tenants seeking rent relief after local health and government officials mandated the temporary closure of nonessential businesses and “on-premises” consumption of food and drinks. In Chicago, an Italian restaurant filed for bankruptcy protection in February and didn’t pay its rent from February to June. Its landlord, Kass Management Services Inc., sought to compel Giglio’s State Street Tavern to pay its rent from March to June or to vacate the premises unless rents are paid, according to filings at the U.S. Bankruptcy Court of the Northern District of Illinois. Bankruptcy Judge Donald R. Cassling ruled that the restaurant has to pay its March rent in full, but noted that the executive order by Illinois Governor J.B. Pritzker on March 16 suspending food consumption on-premises in restaurants, is grounds for force majeure for the other months. The order hindered the restaurant’s ability to perform by prohibiting on-premises consumption of food and drinks and restricted its business to takeout, curbside pickup and delivery, he added. These restrictions hurt the restaurant’s ability to generate revenue and pay rent. That said, the tenant “is not off the hook entirely,” said Judge Cassling. Given that the restaurant can still offer takeout, curbside pickup and delivery services, it should pay a reduced rent “in proportion to its reduced ability to generate revenue due to the executive order.”

Matt Valeo called 10 banks this week, because he wanted to apply for a Main Street loan for his small tech company. Eight banks said they had never heard of the Main Street Lending Program. Two smaller banks said they knew about the program but did not plan to participate. Valeo’s experience illustrates some of the concerns about the novel $600 billion loan program the Federal Reserve launched on Monday to help small and midsize firms, the Washington Post reported. The much-delayed program appears to be off to a tepid start, with lingering questions over whether there will be enough banks participating to make the loans. The Fed’s Main Street Lending Program is supposed to provide low-cost loans to firms with fewer than 15,000 workers, but it has taken the Fed nearly three months to launch it and many have criticized it for being too little, too late. Both the Paycheck Protection Program and Main Street Lending program are multibillion-dollar lending programs aimed at helping smaller and midsize companies, but Main Street is a loan that can be used for any expense. PPP is a grant that doesn’t need to be repaid, as long as most of the money goes toward paying employee salaries. The Fed runs the Main Street program, while the Small Business Administration handles PPP. The programs play critical roles in the government’s vast effort to keep companies afloat and persuade them to retain or even hire back workers amid the worst recession since the Great Depression, which has sidelined at least 20 million workers. PPP had a chaotic launch April 3 as banks struggled to get it running and handle the deluge of customers seeking funds, but it ultimately handed out $500 billion. The Fed’s Main Street program has only just begun. To get a Main Street loan, businesses have to apply through a bank, which can then sell 95 percent of the loan to the Fed, transferring most of the risk to the central bank. The Fed first announced its intent to create the program on March 23. Since this is the first time the Fed has done anything like this, current and former central bank officials say it took time to get the details right. On Monday, the Fed announced that banks could start registering to participate in the program. On Tuesday, Fed Chair Jerome H. Powell told a Senate panel there was “substantial interest” from banks in taking part in Main Street loans. But the banking community is less enthusiastic. “We have limited interest from community banks nationwide,” said Paul Merski, executive vice president for the Independent Community Bankers of America. “It’s a very challenging and complex program.”

Hertz Global Holdings Inc. is in talks to obtain a bankruptcy loan to fund its business reorganization after scrapping a controversial sale of potentially worthless stock, WSJ Pro Bankruptcy reported. The rental-car company on Wednesday called off a potentially unprecedented sale of up to $500 million in shares, leaving it in need of an alternative source of financing to keep its business afloat through its chapter 11 restructuring. Bankruptcy is expensive, and Hertz was counting on raising capital from speculative day traders that have shown a strong interest in the company despite its financial strain. Hertz scrapped the planned stock sale after the Securities and Exchange Commission said it had concerns. SEC Chairman Jay Clayton had said on CNBC that regulators expected Hertz to answer additional questions before it started selling shares. With the stock deal shelved, Hertz is in discussions with a group of top lenders, including a number of hedge funds, to supply a financing package, people familiar with the matter said. This bankruptcy loan could approach $1 billion.