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A bipartisan group of U.S. senators will unveil legislation as early as today for additional fiscal stimulus worth about $908 billion, in an effort to speed up aid to an economy at risk of a further dip due to a record spike in coronavirus cases, the Financial Times reported. But Mark Warner, one of the Democratic senators leading the ten-strong bipartisan group pushing for the relief money, acknowledged that the effort was taking fire from both sides of the aisle over their proposal for a four-month emergency package. “We may have to go through a few more days of drama,” Sen Warner told CNN on Sunday. He added that it remained unclear whether Republican Senate majority leader Mitch McConnell would permit the legislation to go forward for a vote, despite expressing positive sentiments about the effort. The proposal includes $288 billion in small business aid, $180 billion in unemployment benefits that would boost weekly payouts by $300 and $160 billion for cash-strapped state and local governments. It would also offer aid to troubled sectors, including $17 billion for the airline industry. One sticking point remains whether to accord liability protection for businesses that reopened during the pandemic. Read more. 

House Speaker Nancy Pelosi (D-Calif.) said on Friday that she wants to attach a coronavirus relief bill to a $1.4 trillion omnibus spending package that would avert a government shutdown later this month, raising the prospects of long-stalled stimulus relief finally being signed into law, Politico reported. Pelosi said that Senate Majority Leader Mitch McConnell agreed with her about combining the annual spending measures with coronavirus relief during their conversation on Thursday, the first time in weeks the two leaders have discussed moving a relief bill. President-elect Joe Biden on Friday said that he’s “encouraged” by the $908 billion proposal, framing it as the type of bipartisan work that he hopes to foster as president. He cautioned that “any package passed in the lame duck session is not going to be enough overall.” But hurdles remain. Government funding runs out in just one week, and there are still a sizable number of issues impeding an agreement on a massive spending package that would increase agency budgets for the rest of the fiscal year. Read more.

Senate Majority Leader Mitch McConnell (R-Ky.) and House Speaker Nancy Pelosi (D-Calif.) spoke yesterday amid growing momentum for a targeted coronavirus relief deal, the Washington Post reported. They also discussed reaching a deal on a spending bill to avert a government shutdown on Dec. 11. Their talks — the first since the Nov. 3 election — came shortly after a growing number of lawmakers have rallied behind a $908 billion bipartisan spending bill that would aim to buttress parts of the economy over the next several months. While some of these lawmakers stopped short of endorsing every part of the proposal, many said the offer was solid enough that it should be used as the basis for negotiations, a sentiment that Pelosi and Senate Minority Leader Charles E. Schumer (D-N.Y.) expressed Wednesday. Sens. Joni Ernst (R-Iowa), Charles E. Grassley (R-Iowa), Lindsey O. Graham (R-S.C.), John Cornyn (R-Tex.) and Kevin Cramer (R-N.D.) signaled their openness to the package, which had been unveiled by a group of moderate Republican and Democratic senators on Tuesday. The measure is more than what Senate Republicans had originally offered and less than what House Democrats had wanted, but it is designed to try to provide immediate relief to some parts of the economy as the pandemic enters a dangerous and increasingly deadly phase. Graham said he’s “never been more hopeful that we’ll get a bill … the $908 billion bill, that’s the one I support.” He said he had talked to President Trump about the measure “extensively.”

House Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Charles Schumer (D-N.Y.) on Wednesday threw their support behind using a bipartisan, compromise plan as the basis for COVID-19 relief talks, The Hill reported. “While we made a new offer to Leader McConnell and Leader McCarthy on Monday, in the spirit of compromise we believe the bipartisan framework introduced by Senators yesterday should be used as the basis for immediate bipartisan, bicameral negotiations,” the Democratic leaders said in a joint statement, referring to Senate Majority Leader Mitch McConnell (R-Ky.) and House Minority Leader Kevin McCarthy (R-Calif.). Prior to November’s election, Pelosi turned down a $1.8 trillion offer from Treasury Secretary Steven Mnuchin, who was negotiating on behalf of the Trump administration, citing major differences on policy details. McConnell has insisted on a “targeted,” $500 billion approach. The stakes for passing a relief bill during the lame-duck session are monumental. Two crucial unemployment programs are set to expire on Dec. 31, which would leave an estimated 12 million people with no income during the worst phase of the pandemic so far. The move to put a $908 billion compromise bill at the center of talks is a significant retreat from the $2.2 trillion HEROES Act that Democrats have been pushing in recent months, and will add pressure on McConnell to respond in kind. Other key programs, such as $600 in supplemental unemployment insurance and a forgivable loan program for small businesses called the Paycheck Protection Program (PPP) expired in the summer. While McConnell has repeatedly spoken of the need for relief, he said yesterday that he was sticking to his plan with the backing of the White House. Read more. 

In related news, U.S. Treasury Secretary Steven Mnuchin said on Wednesday he backs another $20 billion in additional government payroll support for U.S. airlines, Reuters reported. “I think that would be very meaningful in terms of employment and saving the industry,” Mnuchin said at a House hearing. A bipartisan proposal released Tuesday called for $17 billion in payroll support for airlines to extend the program for four months. In October, American Airlines and United Airlines furloughed more than 32,000 workers after a prior $25 billion payroll assistance program expired. Airlines spent months seeking a new bailout and have won overwhelming support in the U.S. Congress, but lawmakers have been reluctant to support airlines, while other transportation modes like transit, buses, and rail railroad Amtrak are also seeking emergency aid. The Treasury separately offered $25 billion in loans to airlines; to date it has approved more than $21 billion in loans, including $7.5 billion for both American and United. Mnuchin also said that he backed aid for the struggling private motorcoach industry. The bipartisan proposal released on Tuesday would extend $8 billion to bus companies. Read more. 

Treasury Secretary Steven Mnuchin defended his decision to allow a suite of emergency lending programs to expire at the end of the year against criticism from Democrats who said he had misinterpreted the law that enabled them, the <em>Wall Street Journal</em> reported. Mnuchin said at a House oversight hearing yesterday that the $2 trillion Cares Act pandemic relief bill that Congress approved on a bipartisan basis in March didn’t allow him to extend five emergency loan programs. The Fed and Treasury had established those programs with some of the $454 billion Congress had made available in the law. “This was not a political decision. I was merely implementing the Cares Act,” Mnuchin said, echoing comments he made on Tuesday before the Senate Banking Committee. Mnuchin also said that the programs weren’t needed anymore and that the money he hadn’t approved for the programs, as well as other funds that wouldn’t be needed, would be better used on another pandemic relief bill.

The Paycheck Protection Program was the centerpiece of the federal government’s relief efforts to keep millions of small businesses afloat during the coronavirus pandemic. But new data shows what many had suspected all along: The money was shared unevenly, with the biggest sums going to a sliver of the companies in need, the New York Times reported. Detailed loan information released by the Small Business Administration late on Tuesday showed that a mere 1 percent of the program’s 5.2 million borrowers — those seeking $1.4 million and above — received more than a quarter of the $523 billion disbursed. About 600 businesses — including powerful law firms like Boies Schiller Flexner, restaurants like the steakhouse chain started by Ted Turner, as well as the operator of New York’s biggest horse tracks — received the maximum loan amount of $10 million, according to the data. It was the first full accounting of how federal money was spent through the program. Aimed at small companies — generally those with 500 or fewer workers — the program provided forgivable loans to desperate business owners who were faced with widespread shutdowns. But the program allowed businesses to take enough money to cover only a couple of months’ expenses, and it has come under criticism for its poorly defined rules and a hasty and haphazard rollout that allowed fraudsters to tap into the money, which will take years of litigation to sort out. The newly released data also includes details of loans made under the Economic Injury Disaster Loan system, a longstanding Small Business Administration program that was vastly expanded to offer relief to businesses affected by the pandemic. Together, the two programs spread more than $700 billion to struggling companies in just a few months.

Small business bankruptcies filed under the new subchapter V accounted for approximately 18 percent of all chapter 11 cases filed in 2020 through Oct. 31, according to calculations using Bloomberg Law Dockets and statistics from Epiq. Expanding Subchapter V eligibility could help even more small businesses by allowing them a more direct path to restructuring during this economic downturn. Last year, Congress made several changes to the Bankruptcy Code. One of those changes, the Small Business Reorganization Act (SBRA), created a new subchapter of chapter 11 — Subchapter V — providing a simplified, equity-friendly, and potentially less expensive route to bankruptcy reorganization for small business debtors. While no one could have predicted the nature and level of economic uncertainty encountered in 2020, the SBRA is proving to be a useful tool for struggling small businesses. According to Bloomberg Law Dockets, more than 1,300 debtors have elected to proceed under Subchapter V so far in 2020. This number includes approximately 120 debtors whose cases were filed prior to the Feb. 19, 2020, effective date of the SBRA but chose to amend their petitions to make the election. Furthermore, when the SBRA became effective, the liability limit to qualify as a small business debtor under the code was $2,725,625. But in March 2020, The Coronavirus Aid, Relief, and Economic Security (CARES) Act temporarily increased the debt limit to $7.5 million for one year. The case filings in the Bankruptcy Court for the District of Delaware, for example, reveal that of the 29 Subchapter V cases filed there, six (20 percent) had debtors who became eligible for Subchapter V as a result of the increased liability limit provided by the CARES Act. Another seven (24 percent) were re-designated when the debtor or an affiliate exceeded the statutory debt limit. If these patterns are typical of other courts and remain consistent, they could bolster arguments for extending the expiration date of the $7.5 million liability limit beyond March 2021 or even further increasing the debt limit. Read more. 

SBRA: A Guide to Subchapter V of the U.S. Bankruptcy Code, written by distinguished judge Paul W. Bonapfel (U.S. Bankruptcy Court, N.D., Georgia), is a free ebook offering an analysis of the new Subchapter V of the Bankruptcy Code, as well as insights into the emerging case law. Download it here. 

A bipartisan group of lawmakers yesterday introduced a coronavirus aid proposal worth about $908 billion, aiming to break a months-long partisan impasse over emergency federal relief for the U.S. economy amid the ongoing pandemic, the Washington Post reported. The new plan came amid a flurry of congressional jostling about the shape of economic relief, with House Democrats assembling a new proposal, Senate Majority Leader Mitch McConnell (R-Ky.) creating a new plan and President-elect Joe Biden calling for a massive government response. The plan circulated by the bipartisan group of senators is light on details but seeks to reach a middle ground on numerous contentious economic issues. It would provide $300 a week in federal unemployment benefits for roughly four months — a lower amount than the $600 per week Democrats sought, while still offering substantial relief to tens of millions of jobless Americans. The agreement includes $160 billion in funding for state and local governments, a key Democratic priority opposed by most Republicans, as well as a temporary moratorium on some coronavirus-related lawsuits against companies and other entities — a key Republican priority that most Democrats oppose. The measure also includes funding for small businesses, schools, health care, transit authorities and student loans, among other measures. Read more. 

In related news, U.S. airlines would receive $17 billion for four months of payroll support under a new $908 billion bipartisan Senate COVID-19 relief proposal, Reuters reported. A bipartisan group of lawmakers announced a package of $45 billion in transportation assistance, and the offices of Senators Mitt Romney and Mark Warner said the plan includes $15 billion for transit systems, $4 billion for airports, $8 billion for private buses and $1 billion for passenger railroad Amtrak. The $45 billion in transportation assistance is designed to provide assistance for four months. Congress and President-elect Joe Biden can decide next year if more funds should be approved beyond March, Senator Joe Manchin (D-W.Va.) said. The White House has not yet said it supports the plan, and neither have Congressional leaders. A separate Senate Republican leadership relief plan summary sent to lawmakers later on Tuesday had no reference to additional transportation assistance. Read more. 

Additionally, Senate Majority Leader Mitch McConnell (R-Ky.) yesterday circulated a new coronavirus relief proposal that could garner support from the White House among Senate Republicans, The Hill reported. McConnell said that he had been speaking with Treasury Secretary Steven Mnuchin and White House chief of staff Mark Meadows about what President Trump could sign. Congress is quickly running out of time to pass lame-duck legislation with the House poised to leave as soon as next week. Congress faces a Dec. 11 government funding deadline and McConnell said any coronavirus relief will ride on that. McConnell previously twice offered a roughly $500 billion coronavirus relief bill that was rejected by Democrats. McConnell's new proposal would provide protections against coronavirus-related lawsuits, extend unemployment insurance for roughly a month and provide another round of Paycheck Protection Program (PPP) small business assistance. It would also provide more money for the Postal Service, schools, testing and vaccine distribution. If Congress is going to pass additional relief, McConnell said he expected it would be folded into a must-pass government funding bill. Read more. 

More than half of the money from the Treasury Department’s coronavirus emergency fund for small businesses went to just 5 percent of the recipients, according to data on more than 5 million loans that was released by the government yesterday evening in response to a Freedom of Information Act request and lawsuit, the Washington Post reported. According to data on the government’s Paycheck Protection Program (PPP), about 600 mostly larger companies, including dozens of national chains, received the maximum amount allowed under the program of $10 million. Officials from the Treasury Department and the Small Business Administration (SBA) have argued that the program primarily benefited smaller businesses because a vast majority of the loans ― more than 87 percent ― were for less than $150,000, as of August. But the new data shows that more than half of the $522 billion in the same time frame went to bigger businesses, and only 28 percent of the money was distributed in amounts less than $150,000. The newly released data comes after a federal lawsuit filed by news organizations under the Freedom of Information Act challenging the SBA’s refusal to release records on borrowers and loan amounts. A federal judge ordered the release of the data by yesterday and the agency did not appeal.