Climate Change Is Bankrupting America’s Small Towns​​​​​​

Climate shocks are pushing small rural communities, many of which were already struggling economically, to the brink of insolvency, the New York Times reported. Rather than bouncing back, places hit repeatedly by hurricanes, floods and wildfires are unraveling: Residents and employers leave, the tax base shrinks, and it becomes even harder to fund basic services. That downward spiral now threatens low-income communities in the path this week of Hurricane Ida and those hit by the recent flooding in Tennessee — hamlets regularly pummeled by storms that are growing more frequent and destructive because of climate change. Their gradual collapse means more than just the loss of identity, history and community: The damage can haunt those who leave, since they often can’t sell their old homes at a price that allows them to buy something comparable in a safer place. And it threatens to disrupt neighboring towns and cities as the new arrivals push up demand for housing. The federal government has struggled to respond, often taking years to provide disaster funds. And those programs sometimes work at cross purposes, paying some people to rebuild while paying their neighbors to leave.​​

Report: Health Care Bankruptcies See 'Unprecedented Drop'​​​​​​

Despite a tumultuous year with the COVID-19 pandemic, there has been an "unprecedented drop" in chapter 11 bankruptcy filings in the health care industry, according to a recent Polsinelli report, Becker's Hospital Review reported. The law firm's Polsinelli-TrBK Distress Indices Report revealed that the second quarter of 2020 had the lowest recorded distress index in the health care industry since 2010. The report points out that the drop in bankruptcies for the typically distressed industry is due to the substantial and continued government support amid the pandemic. In particular, Congress allocated $178 billion to providers to help them offset revenue losses amid the pandemic.​​



ABI's Health Care Program Oct. 25-26 will feature a session examining health care filing trends and whether the stimulus provided a cure for the industry's distress. Register here.​​

Jobless Claims Total 340,000, Lowest Level Since Early Days of Pandemic​​​​​​

The Labor Department reported that initial filings for unemployment insurance fell last week to their lowest levels since March 2020 in another sign that the labor market is gradually improving from the COVID-19 era, CNBC.com reported. First-time jobless claims totaled 340,000 for the week ended Aug. 28, compared with the 345,000 Dow Jones estimate. That is the lowest level for initial claims since March 14, 2020, when first-time claims totaled 256,000, just before the coronavirus pandemic caused a historic rush to unemployment benefits. The level of initial claims for the week ended Aug. 21 was revised up by 1,000 to 354,000. The level of continuing claims, the measure of ongoing benefits, was 2.75 million, a decrease of 160,000 from the previous week’s revised level. The decrease in the number of continuing claims also represents the lowest level for insured unemployment since the COVID era began.​​

Federal Jobless Aid, a Lifeline to Millions, Reaches an End​​​​​​

Unemployment benefits have helped stave off financial ruin for millions of laid-off workers over the last year and a half. After this week, that lifeline will snap: An estimated 7.5 million people will lose their benefits when federally funded emergency unemployment programs end, the New York Times reported. Millions more will see their checks cut by $300 a week. The cutoff is the latest and arguably the largest of the benefit “cliffs” that jobless workers have faced during the pandemic. Last summer, the government ended a $600 weekly supplement that workers received early in the crisis, but other programs remained in place. In December, benefits briefly lapsed for millions of workers, but Congress quickly restored them. This time, no similar rescue appears likely. President Biden has encouraged states with high unemployment rates to use existing federal funds to extend benefits, but few appear likely to do so. And administration officials have said repeatedly that they will not seek a congressional extension of the benefits. The politics of this cliff are different in part because it affects primarily Democratic-leaning states. Roughly half of states, nearly all of them with Republican governors, have already ended some or all of the federal benefits on the grounds that they were discouraging people from returning to work. So far, there is little evidence they were right: States that cut off benefits have experienced job growth this summer that was little different from that in states that retained the programs. In the states that kept the benefits, the cutoff will mean the loss of billions of dollars a week in aid when the pandemic is resurgent and the economic recovery is showing signs of fragility. And for workers and their families, it will mean losing their only source of income as other pandemic programs, such as the federal eviction moratorium, are ending. Even under the most optimistic forecasts, it will take months for everyone losing aid to find a job, with potentially long-term consequences for both workers and the economy.​​

How the Delta Variant Stole Christmas: Empty Shelves, Long Waits and Higher Prices​​​​​​

Mounting challenges — including factory shutdowns, computer chip shortages and clogged ports — are rattling the retail industry as it prepares for the crucial holiday shopping season, an eight-week window that can account for more than half of a retailer’s annual sales, the Washington Post reported. The rapid spread of the coronavirus’s delta variant adds to the uncertainty: It has already forced a two-week shutdown of a terminal in one of China’s busiest ports and halted operations at one-third of Vietnam’s garment and textile factories. And there are signs that consumers are pulling back. Retail sales took a hit in July, with Americans spending less on clothing, cars and furniture as the variant took hold. Smoothing out the supply chain is a growing priority: Last week, the White House appointed an envoy to address congestion at U.S. ports. The recent bipartisan infrastructure deal includes $17 billion in investments for port infrastructure, but those efforts are unlikely to offer much reprieve before the upcoming busy season. Analysts say they expect widespread shortages, less selection and higher prices for a number of popular holiday gifts, including gaming consoles, TVs, toys and sneakers.​​

SPAC Rout Erases $75 Billion in Startup Value​​​​​​

More than six months after the special-purpose acquisition company (SPAC) craze crested, a broad selloff has wiped about $75 billion off the value of companies that came public through SPACs, according to a Dow Jones Market Data analysis of figures from SPAC Research, the Wall Street Journal reported. A group of 137 SPACs that closed mergers by mid-February have lost 25% of their combined value. At one point last month, the pullback topped $100 billion. The analysis doesn’t include companies that hadn’t closed mergers as of mid-February or those that are no longer trading. Over the same span, an exchange-traded fund that tracks companies that recently went public through initial public offerings slid 12%. The Dow Jones Industrial Average gained 13%. SPAC declines are concentrated in companies tied to green energy and sustainability, though the damage is widespread. About 75% of the SPACs that have announced deals but haven’t completed them are trading below their listing price. Earlier this year, when the sector was perhaps the hottest area of finance, SPACs nearly always rose after announcing deals. Now, it is common for SPACs — such as the one that said in June it is taking electric flying-taxi firm Vertical Aerospace Group Ltd. public — to unveil mergers and see their shares fall. (Subscription required.)​​

Next Thursday's FREE abiLIVE Webinar to Examine the State of Middle-Market Leveraged Loans​​​​​​

Don't miss a special abiLIVE webinar, sponsored by SRS Acquiom, that will discuss the state of middle-market loans. Industry experts will cover:

• current trends impacting the extension of loans;
• the effects of COVID-19; and
• fresh challenges to the extension of credit facilities.

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