What We’re Reading This Week [March 29, 2021]
The American Bankruptcy Institute reported that President Biden signed the “COVID-19 Bankruptcy Relief Extension Act” into law Saturday, March 27, 2021, which extends through March 27, 2022, provisions providing financially distressed consumers and small businesses with greater access to bankruptcy relief. The provisions were included in the original CARES Act that was passed in the wake of the Covid-19 outbreak and were originally set to expire this month. [ABI; March 29, 2021].
The Wall Street Journal notes that, perhaps counterintuitively, the number of people seeking bankruptcy protection fell sharply last year. Individuals filing under Chapter 7 fell by 22% in 2020 as compared to 2019 and individuals filing under Chapter 13 fell 46% from 2019. Furthermore, individual bankruptcy filings have remained below 40,000 a month since last March when the pandemic began. Data suggest that drops in individual filings may be attributable, in part, to government moratoriums on evictions, home foreclosures and student-loan obligations. Conversely, commercial bankruptcy filings rose 29% in 2020, according to the same data. [WSJ; March 29, 2021].
Bloomberg reports that several banks face significant losses in connection with fallout from the recent, massive margin calls on Archegos Capital Management. The margin calls have led to the forced liquidation of several large Archegos positions, sending shock waves across capital markets. [Bloomberg; March 29, 2021].
The Wall Street Journal also reports that one well-known distressed debt investment fund is betting that the travel industry will bounce back from the pandemic by spending roughly $600 million to acquire 15 hotels, such as the Queen Mary in Long Beach, California and the Crowne Plaza in Orlando, Florida. The distressed-debt investor is also positioned to take over retail space in the renovated George Washington Bridge Bus Station in northern Manhattan. These deals come amid indications that tourism and travel are picking up as the Covid-19 vaccine rollout continues across the U.S. [WSJ; March 26, 2021].
