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Senate Adjourns Without Approving Deal to Extend PPP Spending Window

The Senate was unable to finalize a deal to extend the amount of time companies have to spend loans obtained through the Paycheck Protection Program, putting off the likely passage of revised small-business aid rules to next month, the Wall Street Journal reported. Amid broad bipartisan support, senators worked on Thursday to coalesce around a plan to double the time period to 16 weeks, but failed to garner unanimous consent on the agreement before leaving for a Memorial Day recess. The PPP is intended to help small businesses keep workers employed and pay other expenses during the coronavirus pandemic. Under the current rule, the earliest recipients of PPP funds must finish using them by May 29. Senators also sought to extend the deadline for program applications to Dec. 31 from June 30, and allow businesses to use funds to pay for investments needed to reopen safely and buy personal protective equipment for employees. ”I don’t think we’re going to have a problem getting something done one way or the other on it,” said Sen. Marco Rubio (R., Fla.), the chairman of the small-business committee. Some senators had hoped to pass new PPP legislation before the break, even as GOP leaders have urged a go-slow approach on a broader aid package. Separately, House Democrats are expected next week to vote on a bill to change the $660 billion program’s time frame, and change some of the repayment terms. The House proposal has support from the U.S. Chamber of Commerce, the National Restaurant Association, the National Retail Federation and several other outside groups.

Analysis: Millions of PPP Loan-Forgiveness Requests Are About to Rain on Banks

Banks are preparing for a flood of applications for loan forgiveness under the U.S. Paycheck Protection Program, marshaling staff to help borrowers navigate a complicated process that recalls the fraught early days of the Covid-19 small-business relief effort, Bloomberg News reported. Companies that received PPP funding in early April can start to submit forgiveness applications at the end of May. Lenders will have to help them sort through a detailed application document, complete the paperwork and get it to the Small Business Administration for approval. Banks made about 4.3 million PPP loans for a total of more than $500 billion, and the program allows every borrower to request forgiveness. At Valley National Bancorp, 500 employees out of its 3,200-person workforce were designated to help customers process the loans, and a similar number will probably be needed to deal with forgiveness requests, said Chief Executive Officer Ira Robbins. The Wayne, New Jersey-based firm has issued more than $2.2 billion in PPP loans. The SBA released an 11-page document last week listing the criteria small businesses must follow to get their PPP loans forgiven. Among the guidelines are directions on how to calculate payroll costs, which must account for 75 percent of loan proceeds spent. The document is complex, so it will fall to lenders to help borrowers complete it, said Libby Morris, head of U.S. operations at Funding Circle Holdings Plc, a London-based firm that issued PPP loans.

Trump: Not Going to Close Country Again If Second Wave of Coronavirus Hits

President Trump said yesterday that “we’re not gonna close the country” again if the coronavirus sees a resurgence, the Boston Globe reported. During a tour of a Ford plant in Michigan, a reporter asked the president if he was concerned about a potential second wave of the illness. “People say that’s a very distinct possibility. It’s standard. And we’re going to put out the fires. We’re not gonna close the country. We’re going to put out the fires — whether it’s an ember or a flame, we’re going to put it out. But we’re not closing our country.” Trump’s administration in March issued cautionary guidelines — which were originally supposed to last 15 days and were then extended an additional 30 — aimed at slowing the spread of the virus, such as encouraging Americans to work and study from home and to avoid restaurants and discretionary travel. The federal guidelines also recommended against group gatherings larger than 10 and urged older people and anyone with existing health problems to stay home. The guidelines expired in late April, leaving any further restrictions or advisories up to individual states.

J.Crew Landlords Pursue Rent From Reopened Stores

Dozens of J.Crew Group Inc.’s landlords, including some of the biggest mall owners in the country, are seeking rent payments from the retailer’s stores as they reopen, according to court filings, WSJ Pro Bankruptcy reported. The chain’s landlords — including Simon Property Group Inc., CBL & Associates Management Inc. and Brookfield Property REIT Inc. — say that they deserve to be paid rent on stores as malls and shopping centers reopen. Many states are gradually easing restrictions on retailers that were forced to close stores to slow the spread of the new coronavirus, and have issued guidelines for restarting operations. J.Crew has asked the bankruptcy court to allow it to stop paying rent on all its stores for 60 days — until July 6 — saying that it needs to preserve cash after closing about 500 locations in March. J.Crew filed for chapter 11 protection in early May after struggling for years before the coronavirus pandemic prompted it to close stores and scrap plans to raise cash by spinning off its Madewell chain. A committee representing J.Crew’s unsecured creditors has also objected to the retailer’s request to defer rent payments, pointing out the company hasn’t promised to pay back the deferred rent.

Analysis: J.C. Penney Bankruptcy Shows That Retailers Need to Slim Down

For a half-century, J.C. Penney Co.’s store count grew along with American malls, eventually earning the company the crown as the most ubiquitous retailer anchoring those centers. It now operates about a fifth of all the anchor stores in U.S. malls. But when the department-store chain filed for bankruptcy on May 15, it said it would close more than a quarter of its 846 stores, Bloomberg Businessweek reported. That retrenchment reflects a dire financial position: J.C. Penney’s $8 billion debt burden was simply too heavy to bear. But it also signals a growing realization among brick-and-mortar retailers that the relentless pursuit of growth in number of stores hasn’t served them particularly well for years. The amount of merchandise sold per available square foot of selling space in stores has fallen in recent years, while rents have continued upward. And the explosion in online shopping means fewer consumers trek to malls. Now Covid-19 could finally force a reckoning for overstored America. One result: As the lights come on after an almost total shutdown of national chains, many retailers are deciding some of their stores will stay dark forever. “I think for the first time, companies don’t have to decide which stores to close, they have to decide which stores to open,” says Simeon Siegel, retail analyst at BMO Capital Markets. “They will find that they have been forced to make decisions that they probably have been putting off.” It’s much more than a Penney problem. The U.S. is the leader in two categories: most retail selling space per capita of any country, but also lowest sales per square feet, according to commercial real estate company Cushman & Wakefield. It says the U.S. has 25 retailing square feet per capita that brings in about $500 in sales, compared with China, which has less than 5 square feet per capita that accounts for $1,000 in sales.

Email Delays Key Vote On PG&E’s Bankruptcy Plan

California power regulators unexpectedly delayed a key vote yesterday on Pacific Gas and Electric’s plan for getting out of bankruptcy after saying one of the utility’s most outspoken critics sent an improper email attacking the company’s proposal to pay wildfire victims, the Associated Press reported. California Public Utilities Commission President Marybel Batjer was irked by the need to postpone the vote because of the email sent Tuesday by Will Abrams, a survivor of a 2017 wildfire that tore through his Santa Rosa hometown. The communication came during a mandated quiet period from May 15 through Thursday involving the vote on PG&E’s $58 billion plan for ending its nearly year-and-a-half-old bankruptcy. The vote was delayed until May 28, which coincides with a federal bankruptcy court trial on the plan. State power regulators and a U.S. bankruptcy judge must approve PG&E’s plans by June 30 for the company to qualify for coverage from California’s wildfire insurance fund. PG&E should still be able to meet that deadline. In the email, Abrams reiterated objections to PG&E’s plan filed with the bankruptcy court by a committee that represents wildfire victims about their growing doubts the utility will be able to pay $13.5 billion it has pledged to a fund for the fire victims. Batjer delayed the vote so PG&E and other parties could respond to Abrams’ email. Another quiet period will start Friday and continue through May 28. Batjer warned of “serious consequences,” including potential fines, for any other violations.