What We’re Reading This Week [December 14, 2020]
AMC Entertainment Holdings Inc. announced that it is exploring financing alternatives to address the financial strain on the company resulting from the COVID-19 pandemic, including an at-the-market sale of 178 million shares, reports The Street. This announcement comes after Walt Disney Co. announced that approximately 80% of its new content in 2021 would be released online and not in theaters. The Company reportedly needs around $750 million of additional liquidity in order to remain viable through the whole of 2021. [The Street; Dec. 11, 2020]
The Dallas Morning News reports that, while approving a settlement between Dan Kamensky (the founder of Marble Ridge Capital LP) and the Neiman Marcus estate, Judge David Jones of the United States Bankruptcy Court for the Southern District of Texas referred to Kamensky as a “thief” and a “liar” who tried to steal from other creditors of Neiman Marcus out of “pure greed.” As the chairperson of Neiman Marcus’s unsecured creditors committee, Kamensky allegedly attempted to suppress bidding for Neiman Marcus’s e-commerce platform, MyTheresa, for the benefit of Marble Ridge; these attempts came to light in phone conversations that were recorded and ultimately brought to the attention of Judge Jones and federal investigators. Marble Ridge is now being wound down as a result of Mr. Kamensky’s action in the Neiman Marcus bankruptcy case. [Dallas Morning News; Dec. 10, 2020]
The Wall Street Journal reports that Ed Altman, the creator of the Z-score (a metric used to predict defaults on commercial debt obligations), anticipates a substantial number of commercial and consumer bankruptcy filings during the third and fourth quarters of 2021. One of the key indicators Altman relied on in making his prediction is the ratio of non-financial corporate debt to GDP, which reached 57% during the first half of 2020. According to Altman, spikes in this ratio have historically preceded a corresponding spike in corporate debt defaults within 12 months. [WSJ; Dec. 10, 2020]
Senator Elizabeth Warren and House Judiciary Committee Chairman Jarrold Nadler recently proposed a new consumer bankruptcy bill that would replace chapters 7 and 13 of the bankruptcy code with a new chapter 10. The bill’s future will likely largely depend on the outcome of the Georgia Senatorial runoff elections, next month, in which control of the Senate is up for grabs. If passed, chapter 10 would be divided into two sections: one allowing for a discharge without payments made to unsecured creditors and one allowing debtors to address repayment over time of specific types of debt on more favorable terms, which are intended to provide more targeted relief to financially distressed consumers. The bill would also permit student loans to be discharged in bankruptcy in the same manner as most other consumer debts, instead of requiring consumer debtors to meet the exacting undue hardship standard currently required to discharge student loan debt. [U.S. Senate; Dec. 7, 2020]
