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The New York Federal Reserve’s planned launch today of a bond-buying facility could help ease the potential stigma for companies of asking for help and create an important framework for what the central bank steps in to purchase, analysts and investors said, Reuters reported. The Federal Reserve said that starting Tuesday it would buy corporate bonds directly through its secondary market corporate credit facility (SMCCF), one of several emergency programs recently instituted by the central bank to improve market functioning in the wake of the coronavirus pandemic. “They are creating a plan, a framework for what they’re going to do,” said Nick Maroutsos, co-head of global bonds for Janus Henderson. “I’d be more concerned if they didn’t have a framework and they just started buying bonds blindly.” The Fed’s pledged backstop of corporate bonds has allowed companies to continue borrowing money from credit markets despite the toll of the coronavirus on corporate earnings. The Fed will buy a portfolio of individual bonds in an index that replicates the broad credit market, focused primarily on high-quality names. The program, which also included buying exchange-traded funds, had previously been announced but required companies to apply for direct bond purchases. On Monday the Fed removed the need for an application. Read more. 

In related news, the Federal Reserve outlined a proposal Monday to include nonprofit organizations in its previously introduced $600 billion lending program for small and midsize businesses disrupted by the coronavirus pandemic, the Wall Street Journal reported. The central bank said that it was seeking feedback on loan terms that broadly mirror the five-year loans that carry a rate of 3 percentage points above short-term borrowing rates under the existing Main Street Lending Program. That program is open to businesses with up to 15,000 employees of $5 billion in annual revenue last year. The Fed said that it was considering extending loans to small and midsize nonprofit organizations that had been operating for at least five years and that had endowments of no more than $3 billion. Under the Main Street program, the Fed will buy up to 95 percent of eligible loans made by banks. The program will purchase loans of at least $250,000 and up to $300 million. Read more. (Subscription required.) 

The two largest mall landlords and Authentic Brands Group LLC are in talks to buy bankrupt department-store chain J.C. Penney Co., Bloomberg News reported. Authentic Brands may team up with Simon Property Group Inc. and Brookfield Property Partners LP to acquire the retailer as part of its court reorganization. J.C. Penney, which filed for chapter 11 protection in May, has been racing to firm up a business plan by a July 14 deadline, after which the company risks running out of cash to finance its reorganization and emerge from bankruptcy court. The company’s proposed exit plan involves creating two new publicly traded entities, including a real estate investment trust that would hold some of the retailer’s property. For the landlords, buying J.C. Penney would ensure the survival of one of their most ubiquitous tenants amid a wave of retail distress that has seen thousands of stores close permanently. That’s in addition to the pandemic lockdown that shuttered most retailers for months nationwide. Authentic teamed up with Simon and Brookfield to buy teen clothing chain Forever 21 out of bankruptcy earlier this year. And Authentic and Simon are also in discussions with Brooks Brothers Inc. on a joint bid that would be part of a potential bankruptcy filing by that clothing retailer, Bloomberg News reported last week.

The House Small Business Committee will hold a hearing tomorrow at 1 p.m. ET titled "Paycheck Protection Program: Loan Forgiveness and Other Challenges." To view the witness list and additional hearing information, please click here.

After months of doing their jobs from home, many executives and employees say all those hours in the sky and nights away from home may not be necessary going forward, the Wall Street Journal reported. A major decline in corporate travel spending would have vast implications for the nation’s airlines, hotels and rental-car companies. Air carriers have predicted it could take years for business travel to recover to their pre-Covid-19 levels, though a vaccine could bolster confidence. Delta Air Lines Chief Executive Ed Bastian said on an industry webcast earlier this month that the carrier would operate twice as many domestic flights in July as in May. Still, “business travel is very limited right now,” he said. After 9/11, it took the airline industry six years to recover. As many companies look to cut costs, travel is an easy place to start, industry veterans say. “It’s a lot more palatable to say you’re going to cut 30% of your travel, versus lay off more people,” said Sloan Dean, chief executive of Remington Hotels, which operates nearly 90 properties for brands that include Marriott, Hilton and Hyatt.

Washington state has become the second jurisdiction to adopt an emergency diploma privilege amid the COVID-19 pandemic, allowing law graduates to skip the bar exam, Law.com reported. The Supreme Court of Washington on June 12 issued an order that allows graduates from American Bar Association-accredited law schools who are registered for the bar exam in either July or September to be licensed in the state without passing the test. That decision came less than a month after the high court initially rejected a proposal for a diploma privilege. Utah adopted a similar provision in April, but with more restrictions and requirements than Washington. The Washington high court’s terse order offered little explanation for the change in course, but wrote that it, “recognizes the extraordinary barriers facing applicants currently registered to take the bar examination in either July or September 2020.”

Faith Community Health System, a single-hospital system based in Jacksboro, Texas, refiled for bankruptcy protection June 11, about three weeks after its previous bankruptcy case was dismissed, Becker's Hospital Review reported. The health system, part of the Jack County (Texas) Hospital District, first entered chapter 9 bankruptcy in February. The bankruptcy court dismissed the case on May 26 at the request of the health system. The health system originally entered bankruptcy as a result of an arbitration award in favor of Blue Cross Blue Shield of Texas. It owes the insurer $29.3 million. After the bankruptcy case was initiated, the health system faced increased operational strain tied to the Covid-19 pandemic, according to court documents filed May 21. The health system asked the court to dismiss the bankruptcy case to allow it to apply for a Paycheck Protection Program loan through a Small Business Association lender. Small businesses with less than 500 employees are eligible for the loans, but organizations in bankruptcy are not eligible to apply. Faith Community Health System, which has about 250 employees, said it risked losing more than $2.1 million if it remained in bankruptcy. A Texas bankruptcy court granted the health system's motion to dismiss on May 26 to allow it to apply for the loan. On June 11, Faith Community Health System reentered chapter 9 bankruptcy. The health system entered bankruptcy with assets of $10 million to $50 million and liabilities within the same range, according to bankruptcy court documents. Blue Cross Blue Shield of Texas is the health system's largest unsecured creditor. Its second-largest unsecured debt is a $23.9 million bank note owed to Regional Capital Advantage, according to bankruptcy documents.

Small businesses that received government-backed loans to ease the pain of the coronavirus pandemic are beginning to turn to a process some say is as complex as getting the money: figuring out whether they have to pay it back, the Wall Street Journal reported. Some small-business owners have spent dozens of hours wading through the 11-page forgiveness application for Paycheck Protection Program loans. Others are trying to determine how or whether legislation President Trump signed earlier this month changes the math. Some lenders say that the government is putting them in a difficult spot by making them responsible for determining forgiveness, and they fear being saddled with unprofitable loans. The Treasury Department and the Small Business Administration have issued 18 “interim final rules” and 48 pieces of guidance in the form of “frequently asked questions” for the program. The government has approved $512 billion in loans to nearly 4.6 million businesses since the program’s April rollout.The new law lengthens from eight weeks to 24 the time that borrowers have to use PPP funds and qualify for forgiveness. It also lets them spend 40 percent of the loan on rent and certain other expenses, up from 25 percent. The changes came in response to requests for more flexibility from small businesses that remain closed, were slow to reopen or spend more on rent and other overhead. Read more.(Subscription required.) 

In related news, Senate Democrats are calling for the Small Business Administration and Treasury Department to simplify the application process for small businesses seeking loan forgiveness under a federal coronavirus aid program, the Wall Street Journal reported. In a letter dated on Friday to SBA Administrator Jovita Carranza and Treasury Secretary Steven Mnuchin, 47 Democratic and independent senators urge the agencies to take several steps to streamline the forgiveness application for the Paycheck Protection Program. “Since the release of the forgiveness form and instructions a few weeks ago, we have heard significant concerns from small businesses and lenders alike about the complexity of the process, especially for the smallest businesses,” the letter said. The Senators’ recommendations include a simpler application for low-dollar loans that would require minimal documentation and resources, including “how to” videos and a help line, for borrowers who need assistance completing the forgiveness form. Read more. (Subscription required.) 

Additionally, federal authorities administering business payroll loans as part of U.S. coronavirus relief efforts on Friday eased rules prohibiting lending to business owners with criminal records, allowing some with no convictions in the past year to access funds, Reuters reported. The U.S. Treasury Department and the Small Business Administration said the look-back period for non-financial felony convictions has been reduced to one year from five years. The prohibition threshold for business owners with felonies involving fraud, bribery, embezzlement and similar offenses remains five years, they said. The change goes further than what U.S. Treasury Secretary Steven Mnuchin had suggested on Wednesday. He said the period for considering felony records would be reduced to three years. The Paycheck Protection Program, part of a historic fiscal package worth nearly $3 trillion passed by Congress and signed by President Donald Trump to deal with the economic fallout from the coronavirus pandemic, offers businesses loans that can be partially forgiven if used for employee wages. The Treasury Department and the SBA said the decision was made in the interest of criminal justice reform. Read more. 

Hertz Global Holdings Inc. said that it won bankruptcy court approval on Friday to sell up to $1 billion in stock, capitalizing on a remarkable rally in its shares driven by speculators defying conventional market wisdom, Reuters reported. Hertz’s shares have risen 250 percent since June 4, even though their value is likely to be wiped out by the end of its bankruptcy process as creditors take over the U.S. car rental company. The shares soared as much as 680 percent earlier this week. Investors, many of them amateur traders who use apps such as Robinhood, are betting on how high they can push the stock before it collapses. The stock sale could benefit creditors seeking to recover more of their claims during the bankruptcy process. Hertz said in court filings that it would disclose to investors in the stock offering that the shares could “ultimately be worthless.” “Hertz is acting as if it wasn’t bankrupt,” said UCLA Law School professor Lynn LoPucki. “The market thinks there’s equity in this company.” Hertz, which had roughly $18.8 billion in debt at the end of March, is one of the largest companies so far to be undone by the coronavirus pandemic, which has crushed the travel industry.

A group of AMC Entertainment Holdings Inc. bondholders have submitted an alternative proposal to the company’s distressed-debt exchange offer in an effort to avoid taking a steep haircut, Bloomberg News reported. The plan from the creditors, who are working with law firm Milbank, would give them potential equity in the struggling movie theater chain and greater possible upside in a recovery. AMC said earlier this week that it expects to be fully reopened worldwide next month. The proposal has been submitted to AMC’s investment bank Moelis & Co. for review. Earlier this month, AMC proposed a swap that would require investors to take a roughly 50 percent cut on the face value of four subordinated notes denominated in dollars and pounds. Those bonds sit below other debt in line for repayment, and the three dollar issues are trading at deeply distressed levels ranging from 35 cents to 36.5 cents on the dollar, according to Trace.