What We’re Reading This Week [December 21, 2020]
The Wall Street Journal reports on the growth of dividend recapitalization transactions during the COVID-19 pandemic by private equity controlled companies. That growth stands in contrast to prior economic downturns. [WSJ; Dec 17, 2020]
Reporting from Yahoo Finance addresses the growing control that investment firms and hedge funds exert over commercial restructuring efforts as a result of increasingly favorable terms granted to such entities in connection with providing critical liquidity during periods of financial hardship. The reporting further indicates that between 1995 and 2005, 10% of bankruptcy loans given to publicly traded firms were linked to a specific chapter 11 exit plan while, between 2015 and 2018, that figure rose to 50%. [Yahoo Finance; Dec. 17, 2020]
BC Hospitality Group Inc., the parent company of vegan restaurant chain By Chloe, has sought bankruptcy protection under the new subchapter V of chapter 11 of the bankruptcy code applicable to small businesses, reports Business Insider. The company will reportedly seek to sell substantially all of its assets in connection with its bankruptcy filing. [Business Insider; Dec. 16, 2020]
Bloomberg reports that 20 large real estate companies have filed for chapter 11 bankruptcy relief in 2020, with two real estate companies with assets over $50 million filing during the week ending December 12, 2020. The pace at which real estate companies are seeking bankruptcy relief is the highest it has been since 2011. [Bloomberg; Dec. 15, 2020]
