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Trump Signs Executive Orders After Coronavirus Relief Talks Falter

President Trump on Saturday signed orders to extend unemployment benefits, suspend payroll taxes, and offer federal eviction and student loan relief, taking unilateral action that is on shaky legal ground amid stalled negotiations about a fifth round of coronavirus relief in Congress, The Hill reported. The president announced the slew of executive actions from his private club in Bedminster, N.J., where he is spending the weekend after lawmakers on Capitol Hill were unable to reach an agreement with White House negotiators. The president was not physically present for any of the talks over the last few weeks, but has said he received regular updates from his staff. One memo extends the enhanced unemployment benefits that expired roughly two weeks ago and have been critical to millions of Americans out of work due to the pandemic. The benefits will be lowered from $600 to $400 per week, with states required to cover 25 percent of the cost, Trump said. Another of the orders directs the Treasury Department to allow employers to defer payment of employee-side Social Security payroll taxes through the end of 2020 for Americans earning less than about $100,000 annually. The text of the executive order states that the intended deferral period would start Sept. 1, but Trump suggested that it could be retroactive to Aug. 1. Trump also said that he hoped to forgive the deferred payroll taxes and make permanent payroll tax cuts if he is reelected in November. Read more

In related news, President Trump’s attempt to circumvent Congress to provide coronavirus relief in the absence of a broad agreement resulted in confusion and uncertainty on Sunday for tens of millions of unemployed Americans and countless businesses seeking aid after critical benefits lapsed, the New York Times reported. As negotiations with congressional Democrats remained at an impasse, administration officials were on the defensive a day after the president’s legally questionable executive actions, at times contradicting one another as they sought to explain how the measures would work and how quickly Americans could see any form of relief. In a series of television appearances on yesterday, they insisted that Americans would receive the aid promised by Trump, including a $400 weekly supplement to unemployment checks. But that funding will be contingent on agreement from state officials, who are already struggling amid budget shortfalls caused by the economic crisis, and the siphoning of aid from a federal fund for disaster relief in the middle of what is expected to be an active hurricane season. The series of measures Trump signed on Saturday were intended to revive unemployment benefits, address an eviction ban, provide relief for student borrowers and suspend collection of payroll taxes after two weeks of talks between congressional Democrats and administration officials failed to produce an agreement on a broader relief package. But the patchwork of moves was less significant than what the president described in his news conference, and the plan appeared unlikely to have immediate, meaningful impact on the sputtering economy, in part because it provided no direct aid to struggling businesses. Because Congress has the constitutional authority to allocate federal spending, Trump is likely to need congressional agreement, and legislation, to deliver additional financial relief to American families and businesses. Read more

Pelosi, Mnuchin Open Door to Narrower COVID-19 Aid Through 2020

U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin yesterday said that they were open to restarting COVID-19 aid talks, after weeks of failed negotiations prompted President Donald Trump to take executive actions that Democrats argued would do little to ease Americans’ financial distress, Reuters reported. Discussions over a fifth bill to address the impact of the coronavirus pandemic fell apart on Friday, a week after the expiration of a critical boost in unemployment assistance and eviction protections, exposing people to a wave of economic pain as infections continue to rise across the country. Trump on Saturday sought to take matters into his own hands, signing executive orders and memorandums aimed at unemployment benefits, evictions, student loans and payroll taxes. Both Pelosi and Mnuchin yesterday appeared willing to consider a narrower deal that would extend some aid until the end of the year, and then revisit the need for more federal assistance in January. The House passed a $3.4 trillion coronavirus support package in May that the Republican-led Senate ignored for weeks before putting forward a $1 trillion counteroffer. Democrats, pushing hard to keep a $600 per week unemployment benefit, which is a supplement to state jobless payments, and deliver more funds to cash-strapped states and cities battered by the pandemic, had offered to meet Republicans halfway to close the $2 trillion gap — a move the White House rejected. On Sunday, Mnuchin urged lawmakers to accept the money the administration was willing to lay out now to help schools reopen, boost local coffers and help the jobless, even if it fell short of Democrats’ goals.

Pacific Drilling May File Chapter 11 Bankruptcy a Second Time

Pacific Drilling SA said that it may return to bankruptcy court for the second time in less than three years, adding to signs that the offshore drilling industry’s crisis is getting worse, Bloomberg News reported. The Luxembourg-based company hired advisers to help evaluate ways to ease its $1.1 billion debt load, according to a statement on Thursday, and it’s negotiating with its creditors about a possible restructuring. The outcome may include a chapter 11 filing that could wipe out shareholders, the company said. Pacific Drilling would join rivals Noble Corp. and Diamond Offshore Drilling Inc. in bankruptcy, which is threatening to engulf other peers because offshore oil is some of the most costly amid an energy glut. Valaris Plc has also said that it may seek court protection, and Transocean Ltd., the world’s biggest owner of deep-water oil rigs, said this week it’s exploring strategic alternatives. “Due to current market conditions and our outlook for contracting opportunities through 2020 and 2021, we do not believe our current capital structure will be sustainable,” Chief Executive Officer Bernie Wolford said in the statement. The driller filed for bankruptcy in 2017 after the last downturn in commodity prices made its $3 billion debt load unsustainable. It emerged in November 2018. The stock has dropped almost 90 percent this year, and some of its junior bonds were recently quoted at less than 2 cents on the dollar.

Murray Energy Cleared to Poll Creditors on Chapter 11 Exit Plan

Murray Energy Corp. won court approval Friday to begin polling creditors on a revised bankruptcy exit plan and firmed-up financing designed to get the private coal company out of chapter 11 despite disruptions to its business caused by the coronavirus pandemic, WSJ Pro Bankruptcy reported. Judge John Hoffman Jr. of the U.S. Bankruptcy Court in Columbus, Ohio, authorized Murray to commit to accepting a $45 million exit loan provided by Silver Point Capital LP and approved the company’s modified disclosure statement, a document outlining its chapter 11 restructuring plan that will be sent to creditors to vote on. The decisions mark important steps for Murray, which has been delayed in its attempts to leave chapter 11 while it negotiated with lenders on an exit path. The St. Clairsville, Ohio-based coal producer filed for chapter 11 protection in October in the face of historically bad coal markets during the pandemic. In May, Murray said it defaulted on a $90 million portion of its chapter 11 funding provided by lender Great American Capital Partners LLC. The company said it has been unable to come to an agreement with GACP and, as an alternative, sought the financing from Silver Point. Lenders that are providing the rest of Murray’s $440 million chapter 11 financing package and are poised to assume control of the company have agreed to roll over those loans into new facilities after it emerges from bankruptcy.

NAACP Moves to Intervene in Purdue Pharma Bankruptcy over Opioid Settlement

The NAACP on Friday moved to intervene in Purdue Pharma's chapter 11 case, arguing that communities of color should receive settlement proceeds stemming from the national opioid crisis, Reuters reported. The group's motion to intervene comes amid the OxyContin-maker's efforts in bankruptcy to bring in more support for a settlement of opioid litigation that it says is worth more than $10 billion. The company filed for chapter 11 in September 2019 aiming to resolve the litigation. In its filing, the NAACP argues that attention has been disproportionately paid to white suburban and rural areas affected by the epidemic, rather than communities of color that have endured similar harm. U.S. Bankruptcy Judge Robert Drain in New York will consider the group's request at a court hearing on Aug. 26.
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