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A growing cohort of smaller companies that survived the cold depths of the pandemic say now they’re in danger because the economy is too hot, Bloomberg News reported. Mattress sellers, flooring manufacturers and makers of clean energy equipment are warning that stretched supply chains and runaway freight bills have pushed them to the brink of ruin. Unlike global giants, they don’t have the cash and scale to hire their own cargo ships or pass on the soaring expenses, forcing them to seek private bailouts. The roster includes Casper Sleep Inc., which accepted a buyout at a fire-sale price along with a costly bridge loan. Armstrong Flooring Inc., reeling from a 21% cost increase, expects to violate its loan agreement, a fate that has already overtaken TPI Composites Inc., which got cash from distressed-debt specialists to keep the maker of wind turbine blades afloat. “Covid was tough enough to figure out in terms of consumer behavior, increased leverage,” said Lisa Donahue, global co-head of restructuring at AlixPartners. “And then you add stress on the supply chain, coupled with inflation — that makes it really complicated,” she said. “If you have high leverage and other fixed costs to start with, you’re going to find yourself getting pushed a lot closer to the edge.” Read more. 

Explore the many issues that arise when suppliers are unable to make deliveries of promised parts due to financial problems with ABI's Interrupted! Understanding Bankruptcy's Effects on Manufacturing Supply Chains.

Large U.S. airlines are carrying about $20 more debt per passenger than before the pandemic, according to the chief executive officer of Frontier Group Holdings Inc., who predicts the carriers will start addressing those obligations with higher fares, Bloomberg News reported. “How long can that last?” asked Barry Biffle, CEO of ultra-low-cost Frontier Airlines. “They either have to raise their leisure fares or you reduce capacity so you can raise prices.” U.S. carriers amassed roughly $60 billion in new debt last year to contend with the collapse in business from the pandemic. Their interest expense is likely to reach $20.7 billion through 2025, according to the trade group Airlines for America. Frontier’s debt rose about $1 billion, or $1 a passenger, by the same accounting, according to the company. U.S. airlines also face higher costs now and into next year from crew training, pricier jet fuel, and rising airport and aircraft-maintenance expenses. “Cost issues remain topical and continue to run hot with our view that pressures will be more elevated into 2022 than Street estimates suggest,” MKM Partners analyst Conor Cunningham wrote in a Nov. 18 note to clients.

For much of the pandemic, a familiar ritual played out in America’s workplaces: Companies set return-to-office dates, only to later backtrack and delay them due to health concerns, the Wall Street Journal reported. With COVID-19 cases on the rise once again and U.S. authorities warning of a potential surge in infections this winter, employers find themselves questioning their approaches again. Companies like Apple Inc. are delaying January office returns, while others say that they are sticking with their reopening targets. Some, like Salesforce.com Inc., are abandoning dates altogether and urging managers to find ways to meet with their teams in the coming weeks. A few, like Allstate Corp., are telling the vast majority of workers they can stay remote permanently, while keeping some offices open for those who want to gather. The varied strategies reflect much continued uncertainty about the pandemic’s trajectory, along with the unclear fate of the Biden administration’s vaccine and testing mandate that has been temporarily blocked by a federal appeals court. A shift in thinking is also coloring corporate decisions. Many executives increasingly say that companies, like society, might need to better live with a virus that shows no sign of disappearing. They say that means moving forward with office reopening plans or managing alternate arrangements to get teams together.

A Florida man has been sentenced to six months in federal prison for lying to get a low-interest COVID-19 relief loan, the Associated Press reported. Willie Curry was sentenced on Wednesday in Miami federal court, according to court records. He pleaded guilty in August to wire fraud in connection with his fraudulent application to the U.S. Small Business Administration. According to a plea agreement, Curry applied for an Economic Injury Disaster Loan with the SBA in June 2020. He falsely claimed that Will Curry Computers was established in 2015 and had annual gross revenues of approximately $755,416, a cost of goods sold of approximately $170,664, and 10 employees. Prosecutors said Curry actually established the business in 2020, and it had minimal revenues or costs of goods sold and no employees. Curry actually worked full-time as a network manager for Miami-Dade County and suffered no loss of salary from the COVID-19 pandemic, investigator said.

Apollo Global Management Inc. is poised to mint a big return on a less-than-five-month investment in Hertz Global Holdings Inc.’s turnaround after the rental car company said it would incur new debt to redeem preferred shares issued when it exited chapter 11, WSJ Pro Bankruptcy reported. Hertz said yesterday that it would issue $1.5 billion in new bonds to redeem preferred stock that Apollo issued to help lift Hertz out of bankruptcy this summer. The company will pay a 25% premium for early redemption of the preferred shares, along with consent and amendment fees totaling 2.5% of the face value of Apollo’s $1.5 billion investment, according to securities filings. All in, Apollo can expect a 70% annual rate of return on its investment in Hertz, based on the redemption premiums and the short duration of the investment, the company’s bondholders said in a bankruptcy-court hearing last week. Hertz had said earlier this month, when it announced plans to list its common stock on the Nasdaq, that it would redeem the preferred shares. Read more. 

Didn't catch ABI's "Anatomy of the Hertz Chapter 11" webinar? Watch a replay a here. 

Retail sales jumped 1.7 percent in October, according to data released Tuesday by the Census Bureau, beating expectations and rising for the third straight month, The Hill reported. U.S. retailers, restaurants and bars made $638.2 billion in sales last month without adjusting for inflation, up from $627.5 billion in September. Analysts expected a 1.4 percent increase from September, which saw sales grow 0.8 percent from August, according to revised figures released yesterday. The surprisingly strong month of retail sales is a promising sign for the U.S. economy amid high inflation and plummeting consumer confidence. While the labor market, wage growth, stock market and consumer spending have all held steady this fall, a 30-year high in consumer price growth has strained household budgets and turned public opinion against President Biden’s handling of the economy. Even so, the persistence of strong retail sales growth shows a willingness among consumers to power through what economists expect to be a temporary surge in inflation.