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Pelosi Says Next Stimulus Round Will Be $1 Trillion or More

Congress’s next stimulus bill to prop up the U.S. economy during the coronavirus crisis will be at least another $1 trillion, House Speaker Nancy Pelosi told Democrats on a private conference call, Bloomberg News reported. The next stimulus package would be focused on replenishing funds for programs established in Congress’s $2.2 trillion virus relief bill signed into law last month, according to people on the call. Pelosi said that there should be additional direct payments to individuals, extended unemployment insurance, more resources for food stamps and more funds for the Payroll Protection Plan that provides loans to small businesses, lawmakers on the call said. Pelosi also said the bill should assist state and local governments, with an emphasis on smaller municipalities with fewer than 500,000 residents, one lawmaker said. Pelosi has said she wants the next stimulus bill to be passed this month. The House isn’t scheduled to be back in session until April 20 at the earliest. It is possible to pass legislation with most members out of town, as long as no one objects.

Replay Now Available of Yesterday's abiLIVE Webinar Looking at Tools to Navigate the Financial Crisis Related to COVID-19 Featuring Former Speaker Boehner!

Not able to catch the live stream of yesterday’s all-star panel on an abiLIVE webinar discussing the CARES Act and tools to navigate the financial crisis related to COVID-19? Watch a replay as former U.S. House Speaker John A. Boehner of Squire Patton Boggs (Washington, D.C.) joins Karol Denniston of Squire Patton Boggs (San Francisco), Michael C. Eisenband of FTI Consulting (New York), Brian Kennedy of FTI Consulting (Washington, D.C.) and Ed J. Newberry of Squire Patton Boggs (Washington, D.C.) with moderator Stephen Lerner of Squire Patton Boggs (Cincinnati, Ohio) in providing their perspectives. Click here to watch for free (please make sure to provide your member log-in to access the video).

Commercial Chapter 11 Bankruptcies Increase 14 Percent in the First Quarter of 2020, Total Filings Down 5 Percent Before COVID-19 Financial Distress Fully Reflected in Filings

Total commercial chapter 11 bankruptcy filings for the first calendar quarter of 2020 increased 14 percent from the same period last year, according to data provided by Epiq Systems, Inc. The 1,709 total commercial chapter 11s from January 1 through March 31, 2020, increased from the 1,500 total commercial chapter 11s during the same period in 2019. Total overall commercial bankruptcy filings also increased in the first quarter of 2020, as the 9,817 during the first three months of 2020 marked a 4 percent increase over the 9,481 total commercial filings over the same period in 2019. However, total overall bankruptcy filings decreased 5 percent over the first three months of 2020 to 177,198 from the 187,325 filings during the same period of 2019. Consumer bankruptcy filings decreased 6 percent over the first three months of 2020 to 167,381 from the 177,844 consumer filings over the same period of 2019. “The first quarter filings represent a calm before the storm of the financial distress caused by the COVID-19 pandemic,” said ABI Executive Director Amy Quackenboss. “Consumers and businesses face growing financial challenges due to the pandemic, and bankruptcy provides a vital safe harbor from their mounting debts. We anticipate business filings to start rising this month and consumer filings to start to accelerate in early summer.”

Fed Says It Will Provide Financing Against New U.S. 'Payroll Protection' Loans

The Federal Reserve yesterday moved to bolster a new small-business lending program by allowing banks to turn those loans over to the U.S. central bank for cash, easing concerns among banks about getting stuck holding the low interest loans, Reuters reported. The Fed said that it would announce details later this week of a new term financing arrangement for loans made under what is known as the Payroll Protection Program, part of the federal response to the economic effects of the coronavirus pandemic. The program is similar to the arrangement the U.S. government has with mortgage agencies like Fannie Mae and Freddie Mac, whose stamp of approval on a loan makes banks more willing to lend. In this case the very existence of the Fed program — assuring banks that they could unload the Small Business Administration loans when they want — could make the program more attractive to lenders, given the fees of up to 5 percent banks can earn for what now amounts to processing the paperwork. The Payroll Protection Program is one of the key measures adopted as part of a more than $2 trillion effort to offset the economic impact of the coronavirus crisis, which has forced large portions of the U.S. economy to shutter. It dedicates $350 billion for loans so small businesses can keep paying workers and meet basic expenses like rent.

Fire Victims Seek Assurances on PG&E’s $13.5 Billion Bankruptcy Deal

A group of attorneys for victims of wildfires caused by PG&E Corp. have indicated they won’t support its plan to exit bankruptcy anymore unless the company can guarantee that it will actually fund the full $13.5 billion it has promised to pay their clients, the San Francisco Chronicle reported. The lawyers want their clients to hold off on voting for PG&E’s bankruptcy plan until next month, by which point they hope to have secured a better deal with the company. Fire victims and their lawyers have been increasingly vocal about their dissatisfaction with a $13.5 billion settlement that would pay their claims because they no longer trust that PG&E will provide the full dollar amount. So the creditor committee of victims in the company’s bankruptcy case is trying to get PG&E to improve the arrangement by April 28. The committee yesterday asked U.S. Bankruptcy Judge Dennis Montali to let the group send a letter to victims urging them not to vote on the exit plan until after they send a follow-up report on May 1 detailing whether the company improved the settlement deal. All creditors have until May 15 to vote on the plan.

Pier 1 Joins Retailers Citing Court Ruling to Skip Rent

Retailers have a new tool to use in the scuffle between landlords and tenants: a court ruling that could help them withhold rent, Bloomberg News reported. Pier 1 Imports Inc. is the latest retailer to seize on the precedent, asking a judge to let it skip rent payments amid the coronavirus outbreak that has shuttered stores across the U.S. The judge overseeing Pier 1’s case signed an order yesterday approving the retailer’s request. The move came after a judge in New Jersey late last month approved Modell’s Sporting Goods Inc.’s request to pause its bankruptcy until the end of April, allowing it to forgo rent and other required payments. The ruling is significant because even in bankruptcy tenants are expected to pay rent on time, unlike many other obligations such as bond debt. Now, retailers both in and out of bankruptcy court are informing landlords that they’re cutting or withholding rents as customers shelter at home and states order most merchants to close. Amid the pandemic, lenders have been reluctant to push retailers to file for bankruptcy because stores can’t conduct the liquidation sales needed to come up with money to repay creditors. That could change if the lenders know that a judge will grant a temporary suspension. Property owners expect many April rents won’t get paid, and tenants are looking for legal justifications to skip sending in a check, said David Pollack, a retired bankruptcy attorney who spent decades representing landlords. A pause in rent makes sense under the circumstances, Pollack said, so the question then is what happens when business returns to normal.