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Sizzler USA filed for bankruptcy yesterday, the latest casual dining chain to fall victim to the effects of the COVID-19 pandemic, WSJ Pro Bankruptcy reported. One of the earliest affordable steakhouses, Sizzler USA was a cultural staple for decades. It experienced its heyday in the late 1970s and early ’80s but its chain of largely franchised operations shrank in recent years. The company said that its franchised locations, numbering more than 90, aren’t affected by the bankruptcy filing. Sizzler added that it plans to keep the 14 company-owned locations operating during the bankruptcy process, which is aimed at renegotiating leases. Sizzler President Chris Perkins blamed the bankruptcy filing on temporary restaurant closures due to the pandemic and landlords’ unwillingness to abate rents despite the company’s financial distress. Founded in 1958, the Mission Viejo, Calif., company mainly has locations in the western U.S. It later expanded to include seafood and salad bars, chasing newer rivals like Bonanza and Ponderosa steakhouses. In papers filed in the U.S. Bankruptcy Court for the Northern District of California, Sizzlers estimated both its assets and debts at less than $10 million. Yesterday’s bankruptcy filing was the second for Sizzler, which sought chapter 11 protection in 1996.

LA Fitness International LLC is weighing options including a capital raise to address its roughly $1.7 billion debt load and help it weather the COVID-19 pandemic, Bloomberg News reported. The fitness chain, operating under a forbearance agreement that expires Oct. 15, is aiming to reach a deal with lenders to address liquidity needs and keep the business going through the pandemic. Lenders have organized with PJT Partners, which is representing them in talks with the company. Advisors from PJT reached out to the company in recent days in anticipation of working toward a consensual deal. The Irvine, Calif.-based chain’s restructuring plans remain fluid and could change depending on market conditions and virus-related openings and closings. Robert Wilson, LA Fitness’ general counsel, said that the chain has been in contact with lenders and PJT and is working with them “to appropriately address the company’s liquidity and its successful emergence from the Covid closures.” He said that the firm hasn’t hired its own advisers and isn’t weighing a bankruptcy filing at this time if lender talks fail. Like many of its competitors, LA Fitness has deferred some rent payments to try to stay afloat while its locations were closed to help stem the spread of COVID-19. The delayed payments are coming due in the next few months and the company may need to raise new money from existing lenders or outside parties to cover rent payments and other operational costs.

A Delaware Chancery Court justice yesterday agreed to fast-track Tiffany & Co’s lawsuit against French luxury goods conglomerate LVMH for trying to back out of its $16 billion deal to acquire the U.S. jeweler, Reuters reported. Vice Chancellor Joseph Slights said he would set a four-day trial beginning Jan. 5, 2021, which is after the Nov. 24 “drop-dead” date for the biggest luxury merger deal to close but before antitrust approvals begin to expire. The U.S. jeweler had pushed for a November trial before the drop-dead date of Nov. 24. The French luxury goods conglomerate argued for a trial beginning in March or April of next year. The decision is Slights’ first time weighing in on the broken deal, the most high-profile of a series of abandoned transactions in the wake of the COVID-19 pandemic. LVMH’s acquisition of Tiffany hit the rocks in September after the Louis Vuitton owner said it could no longer complete the purchase, citing an intervention by the French government and the U.S. jeweler’s weakening performance.

Consumer law firms are working to help shoppers recoup the value of unused gift cards from bankrupt retail chains, hoping to revive court claims that might otherwise be deemed worthless, WSJ Pro Bankruptcy reported. Gift-card holders filed proposed class-action claims on Friday in the bankruptcy cases of Lord & Taylor and Sur La Table Inc., seeking priority status for those stuck holding potentially unusable gift cards. At the same time, the law firms representing them are planning to request that the U.S. Trustee, the U.S. government’s bankruptcy watchdog, appoint official consumer committees in the same bankruptcy cases. “As retailers are lining up to file bankruptcy because of circumstances that really are beyond their control, ordinary Americans are being left in the cold,” said Thomas Burt, a partner at the law firm filing the claims, Wolf Haldenstein Adler Freeman & Herz LLP. “Their values have gone poof, because somebody messed up.” The litigation firm, along with bankruptcy law firm Sto Helit PLLC, is also seeking class representatives who have unredeemed and unexpired gift cards and gift certificates from Stein Mart Inc. and Century 21 Department Stores LLC, also bankrupt. Each individual holding gift-card claims should get up to $3,025 per person in priority payments, according to the firm. Bankrupt retailers that are permanently closing their stores could collect a windfall if prepaid gift cards are never redeemed. Roughly $2 billion to $4 billion, or up to 4 percent, of gift cards typically go unused every year in the U.S., according to research from Mercator Advisory Group Inc. Retailers that filed for bankruptcy and are shutting down stores usually give gift-card owners about a month to use them. But consumer advocates and lawyers argue that retailers often fail to give proper notice to customers that they might be entitled to a claim just by having a gift card.

GNC Holdings Inc. got legal permission to sell itself to Chinese sponsor Harbin Pharmaceutical in bankruptcy court despite recent resistance from U.S. political figures, Bloomberg News reported. Bankruptcy Court Judge Karen Owens approved the health and wellness company’s plan to sell its assets to its largest shareholder and original bidder, Harbin Pharmaceutical Group Holding Co., for $770 million. The deal was also supported by GNC’s landlords and creditors, GNC’s lawyers from Latham & Watkins said at a virtual hearing yesterday. “The market has spoken. The Harbin bid was the highest, best bid” that emerged during the marketing process and is “better than any alternative plan,” including liquidation, Latham’s Caroline Reckler said on behalf of the company. The sale also provides $4.5 million to GNC’s unsecured creditors who supported the sale as part of a global settlement with the company. Sen. Marco Rubio (R-Fla.) voiced concerns last week over the company’s plans to sell to Harbin, citing risk of GNC customers’ personal data being exposed to the Chinese government. GNC continues to stand by Harbin’s bid and doesn’t believe there are any legal issues related to the sale, Reckler said in court, noting that “access to consumer data” is protected through quarterly audits that “will not change in any way.” The deal also calls for the assumption of 1,400 retail locations, saving thousands of jobs while closing under-performing storefronts, GNC’s lawyers said.

The bankrupt owner of New York Sports Clubs and Lucille Roberts said it was prepared to pay out as much as $850,000 in an effort to quell a social-media-fueled backlash over its billing practices during the coronavirus pandemic, WSJ Pro Bankruptcy reported. The company, Town Sports International Holdings Inc., said that it set aside that amount for customer refunds after filing for bankruptcy Monday. Many more gym members than expected have asked for their money back due to pandemic-related closures, the company said. Some customers complained on social media that they were charged fees even though their local gyms remained closed. Town Sports had initially expected to set aside about $225,000 to cover such requests, a lawyer for the company said during a court hearing on Wednesday. The company’s billing practices are the subject of a continuing probe by New York state authorities. Town Sports said in court documents that it earmarked the money “to compensate customers for certain inconveniences over the past six months that have been caused by the COVID-19 pandemic.”

President Donald Trump said that he was open to more stimulus spending for pandemic relief in stalled talks with congressional Democrats, Bloomberg News reported. Trump, at a White House press conference yesterday, said that he liked “the larger numbers” in a compromise $1.5 trillion stimulus proposal from a bipartisan group of House lawmakers that was an effort to break a months-long deadlock over bolstering the U.S. economy amid the coronavirus pandemic. The plan from a 50-member group of House Democrats and Republicans has a bigger total spending figure than the administration previously endorsed. It’s also higher than what Senate GOP leaders say would be acceptable to Republicans. But Trump, on Twitter earlier yesterday, urged Republican lawmakers to accept a higher level of spending than the last proposal made by the Senate GOP. After initially proposing a $1 trillion stimulus at the end of July, Senate Republicans attempted to advance a bill providing $650 billion in economic aid, without the direct payments to individuals that the president — and Democrats — want.

The owner of New York Sports Clubs and Lucille Roberts gyms is preparing to sell itself out of bankruptcy to lenders that have agreed to supply the financing needed to keep the fitness chains open, WSJ Pro Bankruptcy reported. Town Sports International Holdings Inc. said in a bankruptcy-court hearing yesterday that it is working out a deal with a group of lenders and private-equity firm Tacit Capital LLC for them to serve as the lead bidder, or stalking horse, for the assets. The offer would come in the form of debt forgiveness of no more than $85 million, setting a minimum price for other bidders to beat. Town Sports selected the Tacit-led group over a competing offer from lender Kennedy Lewis Investment Management LLC, which holds 45 percent of the company’s debt. The Tacit-led group agreed to allow Town Sports to use cash collateral pledged to the lenders to cover operating costs, pending the negotiation of a larger financing package to carry the company through bankruptcy. Town Sports filed for chapter 11 bankruptcy on Monday after facing debt coming due this fall as well as reduced cash flow and liquidity due to coronavirus-related closures.

U.S. consumer spending slowed in August, with a key retail sales gauge unexpectedly declining, as extended unemployment benefits were cut for millions of Americans, offering more evidence that the economic recovery from the COVID-19 recession was faltering, Reuters reported. The report from the Commerce Department on Wednesday ramped up pressure on the White House and Congress to restart stalled negotiations for another fiscal package. At least 29.6 million people are on unemployment benefits. Consumer spending accounts for more than two-thirds of the U.S. economy. The Federal Reserve yesterday kept interest rates near zero, noting that the pandemic “will continue to weigh on economic activity” in the near term, “and poses considerable risks to the economic outlook over the medium term.” Fed Chair Jerome Powell told reporters more fiscal support is likely to be needed. “Consumers are being increasingly cautious with their spending,” said Gregory Daco, chief U.S. economist at Oxford Economics in New York. “If Congress is unable to extend fiscal aid to households in the coming weeks, the economy will be particularly susceptible to a cutback in consumer spending, especially from the lowest-income families.” Retail sales excluding automobiles, gasoline, building materials and food services dipped 0.1% last month after a downwardly revised 0.9 percent increase in July. These so-called core retail sales, which correspond most closely with the consumer spending component of gross domestic product, were previously reported to have advanced 1.4 percent in July.

The prognosis for Dave & Buster’s Entertainment Inc., a chain of entertainment centers that offer food, drinks and arcade games, looked increasingly dire this week as the coronavirus economy took a massive bite out of revenue and the company looked to lay off hundreds of workers, FoxBusiness.com reported. The company warned yesterday that it may need to file for bankruptcy if it can’t reach a deal with its lenders amid the coronavirus’ squeeze on the industry, WSJ Pro Bankruptcy reported. That’s after Dave & Buster’s second-quarter revenue plummeted 85 percent this year compared to last, the company announced last Friday — falling from $344.6 million in 2019 to just $50.8 million. In the first quarter, revenues were down to $159.8 million in 2020 from $363.6 million last year. The chain also plans to lay off more than 1,300 employees across seven states, Restaurant Business Online, a trade publication, reported yesterday. D&B will reportedly try and rehire workers from that pool once it is allowed to expand its reopening. The company reached a short-term debt-relief deal with its lenders until Nov. 1, according to the WSJ report, but if that isn’t extended the chain is warning that it may need to file for bankruptcy.