What We’re Reading This Week [July 20, 2020]
Reporting from Reuters discusses how large firms that have filed for bankruptcy relief since the beginning of the COVID-19 pandemic have awarded bonuses to executives shortly before filing for bankruptcy. Of the 40 large firms investigated, Reuters found that approximately one-third awarded bonuses to executives within the month before filing for bankruptcy. [Reuters; July 17, 2020]
Bloomberg reports that California Resources Corp., a prominent drilling company that filed for bankruptcy in the United States Bankruptcy Court for the Southern District of Texas on July 15, 2020, will seek to confirm a debt-for-equity swap with existing secured lenders and junior creditors, who will receive 93% and 7% of the reorganized company, respectively. [Bloomberg; July 15, 2020]
Retailer J.C. Penney Co. has received an extension from its secured lenders of the time in which it is required to provide such lenders with a confidential business for their approval as it required under the J.C. Penney’s current DIP financing arrangement, reports CNBC. J.C. Penney reportedly plans to cut 1,000 jobs in connection with its restructuring. [CNBC; July 15, 2020]
The Wall Street Journal reports that bankruptcy filings under the recently enacted Small Business Reorganization Act (“SBRA”) are likely to increase as federal stimulus programs come to an end and that such filings will test the underlying viability of the law as a tool to assist small commercial debtors reorganize under the bankruptcy code in an efficient manner. The report focuses on Twisted Burger, a Texas-based chain restaurant, which filed for chapter 11 bankruptcy protection under the SBRA in order to obtain rent relief and other concessions from creditors in light of the COVID-19 pandemic. [WSJ; July 11, 2020]
