Reporting from the New York Times suggests that the United States economy may be heading for a “COVID-19 cliff,” in which distressed businesses that have made efforts to amass and conserve cash throughout the COVID-19 pandemic will be forced to spend money at an unsustainable rate as economies reopen and government pandemic relief programs expire
PG&E Corp. received approval from the United States Bankruptcy Court for the Northern District of California to sell $20 billion worth of new debt and equity, reports the Wall Street Journal. Approximately $10.7 billion worth of both investment grade and high-yield bonds will be issued and the company is seeking to find investors to
In transactions reminiscent of the contentious JCrew “trap door” transaction of 2017, performance entertainment company Cirque du Soleil and travel booking company Travelport Worldwide Ltd. each recently obtained more favorable financing terms, in the face of increasing financial distress, by transferring certain valuable intellectual property rights into unrestricted subsidiaries (thus freeing those rights from their existing creditors’ liens) to be pledged as security for new loans. Each company’s transfer has been disputed by certain existing creditors claiming that such actions violated the companies’ existing credit agreements; Travelport now has commenced a declaratory judgment action in New York state court to validate its transfer.
Continue Reading Cirque Du Soleil and Travelport Transactions Create Controversy
Reporting from Bloomberg indicates that Ascena Retail Group, the parent company of clothing brand Ann Taylor, has entered discussions with lenders concerning a potential bankruptcy filing. Ascena reportedly wishes to pursue a partial asset sale in bankruptcy, whereby it would sell certain of its brands to reduce its existing debt, while retaining several of its
Reporting from Bloomberg indicates that April 2020 consumer spending in the United States dropped 13.6% from March, which is the sharpest month-over-month drop in approximately 60 years’ worth of consumer spending data maintained by the Commerce Department. [Bloomberg; May 29, 2020]
The Wall Street Journal reports that 24 Hour Fitness Worldwide Inc. is seeking a
Forbes reports that car rental company The Hertz Corporation filed for bankruptcy on Friday, May 22, 2020. Forbes indicates that Hertz’s financial condition was harmed by the substantial reduction in air travel resulting from the COVID-19 pandemic. Financial distress in the car rental industry is expected to negatively impact the already struggling automotive industry more
In an article for Mayer Brown’s COVID-19 Response Blog, Mayer Brown partners Sean Scott and Aaron Gavant and associate Kyle Tum Suden discuss recent bankruptcy court decisions concerning whether companies in bankruptcy are eligible for paycheck protection program loans under the US CARES Act.
J.C. Penney Company, Inc. is the latest retailer to file for chapter 11 bankruptcy, reports CNN. Although the COVID-19 pandemic played a role in the 118-year old retailer’s decision to file for bankruptcy protection, the company has struggled for nearly a decade to overcome slumping sales and profits. The company has reportedly obtained agreement
Brookfield Asset Management is aiming to invest approximately $5 billion in a retail revitalization investment fund to assist retailers impacted by the COVID-19 pandemic, reports the Wall Street Journal. Brookfield will reportedly focus on obtaining noncontrolling interests in retail businesses with greater than $250 million in pre-pandemic revenue. [WSJ; May 7, 2020]
The Wall Street Journal reports that clothing retailer J. Crew Group Inc. has filed for chapter 11 bankruptcy in the United State Bankruptcy Court for the Eastern District of Virginia. The company has reportedly reached a deal with lenders owed approximately $1.65 billion to conduct a debt-for-equity swap. [WSJ; May 4, 2020]
German airline Lufthansa