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With Jobless Aid Set to Lapse, Lawmakers Fail to Agree on Extension

Submitted by ckanon@abi.org on
The Senate on Thursday dissolved into partisan bickering over a sweeping economic stabilization package, clashing over dueling proposals but failing to reach an agreement to prevent the expiration on Friday of jobless aid that tens of millions of Americans have depended on for months, The New York Times reported. Senate Republicans, on largely party lines, ultimately forced the chamber to begin moving forward with a continuation of the unemployment benefits at a much lower rate, but it was mainly a tactic to compel Democrats, who support maintaining the payments at $600 per week, to go on the record opposing an extension. The bitter impasse over any form of coronavirus relief persisted despite news that the U.S. economy wiped away nearly five years of growth in the second quarter of 2020, with the tally of new claims for state unemployment benefits exceeding one million for the 19th consecutive week. With several programs that have staved off a wave of evictions, foreclosures and layoffs either expired or set to end in days, economists warn that a lapse could wreak further havoc on an already shuddering economy. “The proposals we made were not received warmly,” Mark Meadows, the White House chief of staff, said after a meeting on Capitol Hill with top Democratic leaders and Treasury Secretary Steven Mnuchin. He added as he left the building, “I wouldn’t say that optimism is the word I would characterize the negotiations.” Mnuchin said he and Meadows had proposed a short-term deal in the nearly two-hour meeting, though he declined to share details of the offer. But both Speaker Nancy Pelosi and Sen. Chuck Schumer, the Democratic leader, rejected the proposal, Mnuchin said, and talks are expected to continue Friday.
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Legislation
Consumer Debt
Covid19
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Romney and Other GOP Senators Propose 11th Hour Extension of Extra Unemployment Benefits

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The extra $600 in weekly unemployment benefits provided the federal government to Americans amid the coronavirus pandemic is expected to expire after Friday as Congress struggles to agree upon the next stimulus package, and a few Republican senators are pitching a last-minute proposal, Yahoo! Money reported. Sens. Mitt Romney (R-Utah), Susan Collins (R-Maine) and Martha McSally (R-Ariz.) introduced an alternative unemployment benefits (UI) legislation, aiming to prevent a gap in the distribution of the benefits. “Unemployed workers should not be left in limbo while Congress continues to negotiate the next relief package,” Sen. Romney said. “Our solution extends the supplemental benefits for three months and incentivizes states to update their UI processing systems. We should act with urgency to help the millions of Americans who are on the verge of losing these additional benefits.” The proposal suggests allowing states to choose between reducing the unemployment benefits to an 80% wage replacement rate or gradually reducing the extra benefits to — $500 per week in August, $400 per week in September, or $300 per week in October. Until a deal is reached between both parties, jobless Americans will not receive any unemployment benefits beyond what their states allow. Most states pay those benefits on weeks ending on Saturday or Sunday. That means July 25 or July 26 was the last time those workers got the extra $600.
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Covid19
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Law Firms Are Staffing Up on Bankruptcy Lawyers in Anticipation of a Post-COVID-19 Boom

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A lot remains unknown about our post-coronavirus future, but an onslaught of commercial bankruptcies seems inescapable — and law firms are taking a hard look at their bankruptcy and restructuring practice groups in anticipation of increased demand, the ABA Journal reported. With nearly four decades of experience, John D. Penn, firmwide chair of Perkins Coie’s bankruptcy and restructuring practice, has seen it before, and he knows there’s trouble ahead. “I’m sitting on the beach watching the water recede to the horizon,” he says. “I don’t know how fast it will come or how far inland it will go, but the tsunami is on its way.” Lawyers interviewed for this story report that legal headhunters are busy looking to place or to poach bankruptcy lawyers. In April, Baker McKenzie added three lawyers from Greenberg Traurig to its global restructuring and insolvency practice, including Mark Bloom, who had been Greenberg’s bankruptcy practice group co-chair. Gibson, Dunn & Crutcher got an early start last October by bringing on three business restructuring lawyers from Jones Day. Meanwhile, a spokesperson for Latham & Watkins says the firm has been expanding its global restructuring and special situations practice over the last several years. “The legal recruiters are out there hot and heavy in a very competitive environment,” says Christopher Ward, chair of the bankruptcy and financial restructuring practice at Polsinelli and managing shareholder of the firm’s Delaware office. “We’re fairly busy today, and we are staffing up.” At Stinson, bankruptcy and creditors’ rights partner Thomas J. Salerno says he’s planning to hire at least two additional associates. “Bankruptcy is a generalist practice, and we are beefing up. You need litigation folks, corporate M&A people for restructuring, and tax, labor and environmental skill sets,” Salerno says. “The restructuring partner is the quarterback of the team.”
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PPP Was Intended to Keep Employees on the Payroll, but Workers at Some Big Companies Have Yet to Be Rehired

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If the name of the Paycheck Protection Program (PPP) didn’t make its purpose clear, its key sponsors spelled it out, The Washington Post reported. Sen. Marco Rubio (R-Fla.) explained that the program “was designed as an alternative for unemployment and to prevent unemployment.” But a closer look at three large companies that received millions from the $517 billion program shows that some companies have not retained most of their staff on the payrolls. The Fairmont Grand Del Mar in San Diego, a luxury hotel owned by a group led by Richard Blum, a private-equity chief and the husband of Sen. Dianne Feinstein (D-Calif.), received $6.4 million from the PPP. The hotel has been closed and most of its hundreds of workers are unemployed and unpaid. To maintain their health insurance, workers send money back to the company. A large group of restaurant companies operating under the umbrella of Orlando, Fla.-based Earl Enterprises similarly received loans in amounts ranging from $26 million to $54 million, but in the places most affected by the coronavirus pandemic, the restaurants employ only limited crews. The rest of the staff is unemployed and unpaid, employees said. The companies say that they can’t rehire many people because they can’t fully reopen properties when a government pandemic order limits guests. But their decisions to withhold the money from payroll have left employees to rely on government unemployment checks, which in some states have been difficult to obtain and, for many, will soon stop when the benefit expires. Other furloughed employees are getting kicked off company health insurance because employers are not funding their premiums.  What portion of the PPP has gone to affected employees is unknown. The Trump administration has said that 51 million jobs were “supported” by the program, but a Washington Post analysis of data on 4.9 million loans shows that the Small Business Administration reported that many companies had “retained” more workers than the companies said they employed. Academic efforts to examine whether the program boosted employment have shown mixed results.
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Covid19
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States Brace for Changes to $600-a-Week Unemployment Benefits

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Congress is considering whether to extend or alter the extra $600 in weekly unemployment benefits for workers set to expire at the end of July, The Wall Street Journal reported. One looming question is how well overburdened state unemployment agencies would handle any change. Beyond simply extending the current payments, government officials have proposed shrinking the $600 to a lower flat payment or offering return-to-work bonuses to workers. Another idea would cap benefits at 100% of a worker’s previous income level, a response to the fact many workers are receiving more in benefits than their prior pay. The extra benefits payments — amounting to hundreds of billions of dollars since April — have helped support laid-off workers and the U.S. economy during the pandemic. Economists and state officials say some of the proposed changes, if implemented, could overwhelm an already overburdened system, making it even harder for workers to access aid. The extra weekly benefits are set to expire July 31, though lawmakers are considering a temporary extension while they continue negotiating over a longer term solution. Because of the way states process the payments, many workers may see a gap in payments if Congress doesn’t soon agree to at least a temporary extension.
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Nearly Three-Quarters of Americans Believe Recession Will Last Until 2021

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The U.S. officially entered a recession back in February, according to the National Bureau of Economic Research, but the stock market has been surging in recent weeks, USA Today reported. With many states reopening and millions of Americans going back to work, some people are hopeful that this means the economy is getting back on track. However, there has also been a huge spike in the number of COVID-19 cases since businesses started reopening, which doesn't bode well for Americans' health or the economy. New research also shows that the majority of Americans are pessimistic about the country's economic future. Nearly three-quarters (72%) of U.S. adults believe this recession will continue until at least next year, according to a recent survey from Simplywise.
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Consumer Debt
Covid19
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Briggs & Stratton Scraps Retiree Medical Benefits in Bankruptcy

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Briggs & Stratton Corp.’s bankruptcy might be bad news for bondholders owed $195 million and even worse news for hundreds of retirees who are losing health benefits as the COVID-19 pandemic takes a deadly toll on the nation’s elderly, The Wall Street Journal reported. On Sunday, the day before it filed for chapter 11 protection, Briggs & Stratton’s board voted to terminate health benefits for 450 former workers and end life-insurance protection for  4,000 former workers, effective as of the end of August. “We understand this is unfortunate news for our retirees, but we are grateful for their years of service and dedication to the company,” Briggs & Stratton spokesman Rick Carpenter said. At a hearing Tuesday before the U.S. Bankruptcy Court in St. Louis, <b>Ronit Berkovich</b> of Weil, Gotshal & Manges LLP said that if the company completes a planned bankruptcy sale to private-equity firm KPS Capital Partners LP, the business will be saved but little or nothing will be left for bondholders and other unsecured creditors. An auction planned for September could drive up the price, and KPS has agreed to pay some vendors as part of its buyout offer. But Briggs & Stratton’s financial plight — short of cash and with debt coming due this year — means the company can make no promises to low-ranking creditors. Bondholders are joining forces to try to steer Briggs & Stratton’s bankruptcy in a different direction, possibly toward a business reorganization that would improve their prospects of recovery. As for the retirees, they weren’t heard from at Briggs & Stratton’s courtroom debut. The company is seeking a court order saying that it was justified in terminating the benefits, despite Bankruptcy Code provisions that limit the rights of troubled companies to strip retirees of benefits.
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Business Reorganization
Covid19
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Nostalgic for 2019: Three in Four Americans Worry Life Will Never Go Back to “Normal”

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Remember the good old days, way back in 2019? It’s an odd feeling to be nostalgic for a time that just passed, but according to a new survey of 2,000 Americans, many are worried the world will never return to its simpler, pre-coronavirus state, Study Finds reported. All in all, 75% of those surveyed said they fear life will never return to what was once “normal.” The survey, commissioned by Torch, asks respondents how they envision the world will appear in the wake of COVID-19. One overarching theme that participants echo is just how different the workplace, and employment in general, will be. As of now, 59% of surveyed Americans admit that they would be far too afraid to start reporting to a shared workplace once again. Meanwhile, 36% have concerns they’ll <em>never</em> be able to get back to the office without potentially putting themselves and their family in harm’s way. In broader terms, 63% of participants flat out say that their job will never be the same. That same group is anticipating working remotely for at least the rest of 2020.
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Consumer Debt
Family/Divorce Issues
Covid19
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