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A Brooks Brothers part-owner that lost $100 million when the menswear retailer went bankrupt last year sued its former controlling Del Vecchio family for allegedly ignoring potential deals that could have warded off chapter 11, WSJ Pro Bankruptcy reported. Hong Kong-based TAL Apparel Ltd. said in court papers that the troubled company had interested suitors in 2019 but the Del Vecchio family turned its back on those opportunities, choosing to gamble on bankruptcy instead. Brooks Brothers filed for chapter 11 in 2020, joining a herd of pandemic-battered apparel retailers. The company was sold out of bankruptcy for $325 million to Authentic Brands Group LLC and mall operator Simon Property Group Inc. TAL, a former minority shareholder, said the 2019 offers were rejected because, although they were rich enough to keep Brooks Brothers out of bankruptcy, they weren’t enough to protect the Del Vecchio family from having to pay out on a make-whole agreement with TAL. In 2016, when TAL agreed to invest $100 million for a minority stake in Brooks Brothers, the deal came with a guarantee backed by the Del Vecchios, according to the complaint. Under the agreement, if Brooks Brothers was sold for less than $652 million — the valuation assigned to the company when TAL bought its stake — the family would make good on TAL’s losses, the lawsuit said. The potential offers that arrived in 2019 were at prices that would have forced the Del Vecchios to come up with money of their own to cover TAL’s losses, according to the complaint, which said the family “threatened that instead of pursuing the bids on the table, they would ‘roll the dice’ and sell Brooks Brothers as part of bankruptcy proceedings.” Bankruptcy or no bankruptcy, TAL is seeking a court order compelling Claudio Del Vecchio, his son Matteo and affiliated entities to make good on TAL’s losses.

The Supreme Court may soon be asked to weigh in on the nationwide eviction freeze enacted by public health officials to keep cash-strapped renters in their homes amid the coronavirus pandemic, The Hill reported. The announcement came on Monday from a group of landlords that successfully challenged the Centers for Disease Control and Prevention’s (CDC) eviction moratorium in federal court earlier this month. The judge who struck down that policy, however, stayed her ruling in the Washington, D.C., court while the Biden administration appeals. Now the challengers are seeking to have U.S. District Judge Dabney Friedrich’s stay lifted. If successful, it would have the effect of gutting the nationwide eviction freeze as landlords seek to remove tens of thousands of tenants who have been unable to pay rent due to financial hardship. In a four-page letter to Friedrich, who was appointed by former President Trump, the challengers said they intend to ask both the intermediate appeals court in Washington and the Supreme Court to overturn her stay, arguing the CDC’s improved public health outlook negates the stated reason for the eviction pause. “Although the CDC once feared that people who gather indoors after being evicted will spread COVID-19, the CDC has concluded that the threat of spreading the disease indoors is so low that vaccinated Americans do not even need to wear masks or socially distance ‘in any setting,’” wrote the the Alabama Association of Realtors and its co-challengers.

Illinois Governor J.B. Pritzker announced new help for state residents seeking housing and rental assistance on Monday, offering grants of up to $25,000 thanks to federal funds set aside for that purpose, the Chicago Sun Times reported. The new dollars were just one part of Pritzker’s housing assistance announcement. He also said the state will end its eviction moratorium in August with a “gradual phase out over the next few months.” “It was clear when we implemented last year’s housing relief programs that the need was far greater than the dollars allocated to our state,” Pritzker said at the Segundo Ruiz Belviz Center in Chicago. “The Illinois Rental Assistance Program is a testament to how good government can make a life changing difference for people when our dollars … follow our values,” Pritzker said. “This program expansion will allow us to take that impact to new heights for tens of thousands of Illinoisans.” The governor was joined by state senators and representatives representing Chicago as well as other state officials for the rental assistance program announcement, which is expected to provide about 120,000 renters some relief.

Texas, Indiana and Oklahoma this week joined the growing number of states that are withdrawing from federal pandemic-related unemployment benefits, the New York Times reported. Supported by Republican governors and lawmakers as well as national and state chambers of commerce, the decision will eliminate the temporary $300-a-week supplement that unemployment recipients have been getting and will end benefits for freelancers, part-timers and those who have been unemployed for more than six months. In Wisconsin, where the governor is a Democrat, Republicans in the Assembly and Senate have introduced legislation to end participation. Alabama, Alaska, Arizona, Arkansas, Georgia, Idaho, Iowa, Mississippi, Missouri, Montana, North Dakota, Ohio, South Carolina, South Dakota, Tennessee, Utah, West Virginia and Wyoming also plan to end federal unemployment benefits, beginning in June or early July.

When shares of Hertz Global Holdings Inc. soared after the company filed for bankruptcy a year ago, finance professionals reacted with a mix of confusion and scorn. A year later, small investors who bet on the company in its distress are getting the last laugh, WSJ Pro Bankruptcy reported. The century-old rental-car giant is poised to mint big gains for loyalists on its way out of bankruptcy. It’s a result that seemed unfathomable when its business unraveled early in the COVID-19 pandemic and another marker of an upside-down year in markets. On May 14, a bankruptcy court approved a winning auction bid that will hand control of Hertz to institutional investors who won a heated competition to buy the company out of bankruptcy as its prospects brightened. Hertz expects stockholders to receive more than $7 a share of value out of the deal, and perhaps as much as $8 a share, as the company emerges from chapter 11. Hertz closed at $5.76 on Tuesday in the over-the-counter market. The New York Stock Exchange delisted the shares in October after determining they were no longer suitable, since the company was in bankruptcy. Driven by individuals trading on apps, Reddit message-board boosters and the boredom of lockdown, financial markets have been on occasion hard to explain this year, including the GameStop Corp. mania, a joke cryptocurrency and a $100 million deli. It’s not surprising that standard bankruptcy practice should also get turned around. Hertz shareholders avoided being wiped out as the company’s prospects recovered to match the bullish outlooks of online traders who piled into the company in June after it filed for bankruptcy protection. Whether or not they were acting irrationally, their view of Hertz ended up closer to reality than the supposed smart money that dumped the stock.

The Biden administration’s efforts to provide $4 billion in debt relief to minority farmers is encountering stiff resistance from banks, which are complaining that the government initiative to pay off the loans of borrowers who have faced decades of financial discrimination will cut into their profits and hurt investors, the New York Times reported. The debt relief was approved as part of the $1.9 trillion stimulus package that Congress passed in March and was intended to make amends for the discrimination that Black and other nonwhite farmers have faced from lenders and the United States Department of Agriculture over the years. But no money has yet gone out the door. Instead, the program has become mired in controversy and lawsuits. In April, white farmers who claim that they are victims of reverse discrimination sued the U.S.D.A. over the initiative. Now, three of the biggest banking groups — the American Bankers Association, the Independent Community Bankers of America and National Rural Lenders Association — are waging their own fight and complaining about the cost of being repaid early. Their argument stems from the way banks make money from loans and how they decide where to extend credit. When a bank lends money to a borrower, like a farmer, it considers several factors, including how much interest it will earn over the lifetime of the loan and whether the bank can sell the loan to other investors. By allowing borrowers to repay their debts early, the lenders are being denied income they have long expected, they argue. The banks want the federal government to pay money beyond the outstanding loan amount so that banks and investors will not miss out on interest income that they were expecting or money that they would have made reselling the loans to other investors.

New York is loosening some COVID-19 restrictions this week, signaling a step toward normalcy for a wide range of businesses. But for fitness studios such as Y7 Studio, Barry’s Bootcamp and Mile High Run Club that managed to endure a year of devastated sales, the fight for survival is hardly over, Bloomberg News reported. They must navigate fast-changing and confusing rules. New York has said fitness centers can operate at 50% capacity as of May 15, but also says that, as of Wednesday, it is not basing capacity limits for businesses on a percentage of maximum occupancy, but rather on how many people can fit in a space while staying six feet apart. For small-format workout facilities, that might not be much of a reprieve. Meanwhile, these operators face delicate decisions about what masking rules to enforce at their businesses now that state mandates have eased. Many are finding it difficult to rehire and retrain instructors to adequately staff a full schedule. And none of them know how eager customers will be to return, given lingering virus fears and the possibility that last year’s at-home exercise routines turn out to have staying power.

Lenders recouped far less from U.S. companies that went bust during the pandemic than in previous economic downturns, a new report has revealed, reflecting loose underwriting standards and shifts in corporate debt structures, the Financial Times reported. The average recovery rate for the holders of bonds and loans was 45 cents on the dollar, rating agency Moody’s found, down from 59 cents in the 2008-09 financial crisis and below the historical average of more than 50 cents. Oil and gas group Gavilan Resources provided the lowest company-wide recovery during the pandemic at just 9 cents on the dollar. The Moody’s report outlines a marked shift in how much investors can expect to retrieve from companies they lend to should they renege on their obligations — the effects of a decade of rampant demand for corporate debt and of borrowers having the upper hand over lenders. Moody’s noted that the company-wide averages downplayed the severity of the situation for specific types of debt. Subordinated bondholders, which sit just one level above equity investors in terms of seniority in bankruptcy, received an average of just one cent for every dollar. This was a drop from 29 cents on the dollar from the financial crisis, and down from 23 cents during the dotcom bust. Senior unsecured bondholders, which sit on the next level up, received just 5 cents on the dollar on average, down from 49 cents during the financial crisis.

Nearly one-quarter of Americans ended 2020 worse off financially than they were 12 months ago, according to results from a Federal Reserve survey released yesterday, The Hill reported. A survey conducted by the Fed in November found that 24 percent of Americans said their financial standing took a hit amid the pandemic, 10 percentage points higher than at the end of 2019. The percentage of Americans reporting a decline in their finances was the highest recorded by the Fed’s annual Survey of Household Economics and Decisionmaking (SHED) since 2014. "This new survey gives us valuable details about the financial challenges families have faced during the pandemic," Fed Governor Michelle Bowman said in a statement. "Even as the economy has improved, we can certainly see that some are still struggling, especially those who lost their jobs and those with less education, many of whom fell further behind." The U.S. economy is expected to bounce back strongly from the pandemic-driven recession, which caused the quickest and steepest economic decline since the Great Depression. Even so, millions of Americans who lost their jobs or faced other financial hardships during the pandemic are facing much steeper roads to recovery. While nearly one-in-four Americans reported being worse off financially, that ratio is far higher for Black and Hispanic Americans.