Grupo Aeroméxico SA B de CV is close to clinching court approval for a proposed corporate reorganization about 18 months after filing for chapter 11, although some creditors argue the bankruptcy plan unfairly enriches certain shareholders and shouldn’t be confirmed, WSJ Pro Bankruptcy reported. Some of Aeroméxico’s unsecured creditors — including Invictus Global Management LLC, Corvid Peak Capital Management LLC and Hain Capital Group LLC — say the proposed reorganization, which would recapitalize the business and bring in new owners, unfairly rewards certain insiders and creditors poised to own significant stakes in the airline after it exits bankruptcy. Objecting creditors said in court papers Tuesday they weren’t offered the same opportunity to subscribe to a planned sale of Aeroméxico equity as others with equal standing under bankruptcy law. “No bankruptcy court has ever approved…a plan of reorganization in which certain select creditors received a recovery on account of an investment opportunity while all other creditors in the same class were entirely excluded at the time of solicitation,” the objecting creditors said in a court filing.
Treasury Secretary Janet Yellen on Wednesday said the coronavirus relief bill signed into law in March “acted like a vaccine for the American economy” in some ways, pointing to safeguarding the financial system from new variants, The Hill reported. In remarks at the U.S. Conference of Mayors in Washington, D.C., Yellen said that while protection from the relief package, dubbed the American Rescue Plan, was not “complete,” it was “very strong.” “In some ways, the [American Rescue Plan] acted like a vaccine for the American economy, protecting our recovery from the possibility of new variants,” Yellen said. “The protection wasn’t complete, but it was very strong — and it prevented communities from suffering the most severe economic effects of Omicron and Delta,” she added. Biden signed the $1.9 trillion COVID-19 relief package into law less than two months into his presidency, at a time when coronavirus infections in the U.S. were on the decline following a winter surge. No Republicans in the House or Senate voted for the bill. The legislation includes funding to bolster vaccine distribution, school reopenings and enhanced unemployment benefits. It also included capital for $1,400 direct payments to most Americans and extended the child tax credit, among other provisions. Yellen’s comments come as the U.S. economy is experiencing a host of difficulties, including high inflation, supply chain snarls and disappointing jobs numbers.
Eagle Senior Living, a nonprofit operator of 15 facilities in seven states, has filed for bankruptcy to restructure its roughly $235 million in municipal bond debt, the latest continuing-care community to seek protection from creditors during a pandemic that has increased labor costs, WSJ Pro Bankruptcy reported. The Ann Arbor, Mich.-based business filed for chapter 11 protection on Friday in the U.S. Bankruptcy Court in Wilmington, Del., with plans to reduce its debt by $40 million and transfer and possibly sell certain facilities to new operators. Eagle Senior said that it was having financial trouble before the pandemic but is the latest senior-care business to come under increasing financial pressure due to the COVID-19 pandemic, unable to make debt service payments. Occupancy rates have declined to roughly 81% from more than 90% before the pandemic, Todd Topliff, president of parent American Eagle Delaware Holding Co., said in a sworn declaration. Meanwhile, staffing costs have risen because of outbreak-related hazard payments and overtime, sign-on bonuses and wage increases to make up for “unprecedented” labor shortages across Eagle Senior’s facilities, he said. The business said it had to turn to staffing agencies to supplement its workforce, and continues to combat labor shortages it attributed to vaccine mandates and competition from other industries for workers. Costs also piled up for personal protective equipment, as well as food containers so meals could be personally delivered to residents’ rooms instead of eating in a dining room, Mr. Topliff said in court papers. Supply shortages of various products also added to costs. The business has been operating under several forbearance agreements. The business operates in Colorado, Minnesota, Wisconsin, Ohio, Alabama, Tennessee and Florida and has a total of 1,000 residents. It has 362 independent living apartments, 641 assisted living units, and 192 memory care units. COVID-19’s rapid spread through eldercare facilities, along with the pandemic’s lockdowns, have deterred many older Americans from moving into senior communities. Nearly 8% of the $41 billion in outstanding senior-living bonds are in default as of December, according to Municipal Market Analytics, the most since tracking began in 2009. The sector now accounts for almost one-quarter of defaulted debt in the muni market, not including bonds caught up in Puerto Rico’s bankruptcy.
U.S. retailers on Friday reported record holiday sales numbers despite grappling with surging COVID-19 cases, rising prices, supply chain issues and worker shortages, The Hill reported. Retail sales totaled roughly $887 billion in November and December, a record figure that represents a 14.1 percent increase over 2020, according to an analysis from the National Retail Federation (NRF). NRF credited the strong sales to consumers’ increased wages and high personal savings. Clothing stores saw the largest increase in sales, up 33.1 percent, while sales at sporting goods stores and general merchandise stores increased by 20.9 percent and 15.2 percent, respectively. The figures, which are based on U.S. Census Bureau data, exclude car dealers, gas stations and restaurants, which were among the businesses hardest hit by the omicron surge in December. While overall holiday sales exceeded expectations, the Commerce Department said Friday that retail sales fell by 1.9 percent from November to December after analysts predicted that sales would remain flat.
U.S. restaurants stayed afloat during the pandemic thanks to outdoor heaters, elaborate patio spaces, and to-go drinks. But the creative workarounds weren’t enough to stem the losses from the recent omicron-fueled surge of Covid cases, Bloomberg News reported. Sales decreased at 98% of restaurants across the country in December, according to a poll of 1,169 restaurants conducted by the Independent Restaurant Coalition. Sales dropped by at least half at 58% of those surveyed, while 80% of restaurant owners said omicron impacted their operating hours. U.S. restaurants stayed afloat during the pandemic thanks to outdoor heaters, elaborate patio spaces, and to-go drinks. But the creative workarounds weren’t enough to stem the losses from the recent omicron-fueled surge of Covid cases. Sales decreased at 98% of restaurants across the country in December, according to a poll of 1,169 restaurants conducted by the Independent Restaurant Coalition. Sales dropped by at least half at 58% of those surveyed, while 80% of restaurant owners said omicron impacted their operating hours. The sharp hit to restaurants nationwide demonstrates the pandemic’s continuing blow to the industry, despite national efforts to avoid economic pitfalls from shutdowns this winter. The impact is particularly challenging for businesses that didn’t get funding from the Restaurant Revitalization Fund, a $28.6 billion federal effort to rescue struggling businesses that was part of the American Rescue Fund. Four out of five businesses that did not receive grants said they were in danger of permanently closing in 2022. The fund provided as much as $5 million per location for restaurant owners — or as much as $10 million per business — who could demonstrate their businesses experienced significant financial distress during the pandemic.
