Monthly Archives: July 2020

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Briggs & Stratton's plant at 3300 N. 124th St. in Wauwatosa is shown June 30, 2020. At one time the company employed thousands at four plants in the area. Now it's down to a few hundred people, and that's about to drop even further with the company moving production to a nonunion plant in New York.(Photo: Angela Peterson / Milwaukee Journal Sentinel)

Small engine manufacturer Briggs & Stratton Corp., founded in Milwaukee in 1908, on Monday filed for bankruptcy protection with plans to sell its assets to a private equity firm that specializes in manufacturing and has done previous deals in Wisconsin.

Briggs filed for Chapter 11 in the U.S. Bankruptcy Courtfor theEastern District of Missouri. Under Chapter 11, a company and its creditors work out a reorganization plan that enables the business to continue to operate.

Briggs, the world's largest manufacturer of small gasoline engines, employs about 5,000 people worldwide including around 1,300 in the Milwaukee area. Years ago, the company had 11,000 employees just in Wisconsin.

As part of the bankruptcy, KPS Capital Partners LP, a New York private equity firm, agreed to buy all of Briggsassets for approximately $550 million.

The so-called stalking horse bid sets a minimum price for the sale.

The offer would need court approval and could still be topped by another bidder, but for now it's probably "the best outcome they could come up with," said analyst Tom Hayes with Northcoast Research.

The manufacturer of small engines used in outdoor power equipment around the world said it arranged for $677.5 million of debtor-in-possession financing that would help fund operations during the bankruptcy proceedings. KPS said it agreed to provide $265 million of that amount as part of the reorganization.

"KPS intends to grow the new Briggs & Stratton aggressively through strategic acquisitions. The new Briggs & Stratton will be conservatively capitalized and not encumbered by its predecessor's significant liabilities," Michael Psaros, co-managing partner of KPS, said in a statement.

The private equity firm also said it has entered into an agreement in principle with the United Steelworkers of America for a new collective bargaining agreement for Briggs hourly employees represented by the union in the Milwaukee area. The agreement would become effective upon completion of the acquisition and reorganization.

"KPS has a proven track record of investing in manufacturing facilities and operating them profitably and sustainably," Steelworkers President Tom Conway said in a statement.

Retirees, on the other hand, are losing their supplemental health and life insurance.

On Sunday, Briggs' board of directors voted to terminate the group insurance plan for retirees. "Your health and life insurance coverage (under the plan) will end on August 31, 2020. Any eligible claims incurred on or before August 31 will be covered by the plan," the company said.

"There will be some effect on the pension obligations. This will be covered by the bankruptcy court," company spokesman Rick Carpenter said in an email to the Journal Sentinel, referring retirees to a frequently asked questions document.

Briggs & Stratton joins other large companies many of them in the retail and energy sectors that have filed for bankruptcy in recent months.

Briggs was losing money and burdened by large debts when the economic downturn caused by coronavirus hit. Its sales fell by $107 million, or 18%, to $474 millionin its thirdquarter ended March 29, compared with the same period a year earlier.

The company warned that its losses, the pandemic and pending debt payments raised substantial doubt about its ability to continue as a going concern. Yet in June, while it skipped a $6.7 million interest payment, the company awarded its executives and other key employees more than $5 million in cash retention awards.

Such awards are often given before a company files for bankruptcy.

"Whether you like the management team or not, they likely get to stay in place for the foreseeable future," Hayes said.

Briggs makessmall engines, residential and commercial lawn and garden equipment, portable generators, pressure washers, snow throwers and other outdoor power equipment. The companys products are sold in more than 100 countries under such brands as Briggs & Stratton, Victa, Simplicity, Ferris, Billy Goat, Vanguard, Branco and Allmand. It also sells engines to other manufacturers, including Deere & Co., the Toro Co. and Viking.

Briggs has plants in Wisconsin, Alabama, Georgia, Missouri and New York as well as Australia and China. The company recently said it was cutting more than 200 jobs in Wauwatosa as part of an earlier announced move of production work to its factory in Munnsville, New York.

It's unknown yet whether Briggs will eliminate more jobs.

"I don't think they can do a lot more trimming" without shedding product lines, Hayes said. "The plants have been consolidated. I don't think it would make sense to offshore other production."

Briggs short-term debt includes $195.5 million in bonds due in December. That debt had to be refinanced by Sept. 15or the company would be in violation of its loan agreements with a consortium of banks, enabling them to demand immediate repayment.

The company had planned to do that by selling some businesses.

They kind of boxed themselves in a corner, Hayes said.

In March, Briggs announced plans to sell its commercial turf products business, sold under brand names such as Ferris, Billy Goat, Simplicity and Snapper, and its pressure washer and portable generator product lines.

"It seems like they took that off the table for now," Hayes said.

The smaller company would focus on engines for residential outdoor power equipment, commercial engines, standby power generation and commercial battery systems.

"Technological advances are increasingly making battery-powered products competitive with engine-driven equipment in terms of performance, principally on the residential side, as well as the commercial side to a lesser degree," Briggs said.

The company hasmore thanhalf of the engine market for residentialoutdoor power equipment and established brands.

Dan Ariens, president and CEO of AriensCo., a Brillion-based manufacturer of lawn and garden equipment and snow throwers, said he was surprised that Briggs wasn't able to avoid Chapter 11 even as the engine maker has struggled.

KPS has made investments in Wisconsin paper mills and Waupaca Foundry. The firm says companies in its portfolio operate 150 manufacturing plants in 26 countries, with about 23,000 employees.

"The statement that KPS put out sounded like the right plan. The Briggs brand is very strong, and I think the focus on that will be good," Ariens said.

The company was founded in 1908 by Stephen Briggs, an inventor, and Harold Stratton, an investor, and incorporated in 1910. It initially grew by making parts for the booming automobile industrystarter switches were an early core product small engines for such revolutionary products as washing machines as well as garden tractors, cultivators and generators.

In 1953, it introduced the first lightweight aluminum engine that found a ready market in lawn mowers just as Americans were flocking to the suburbs. The company produced more than 2 million engines a year on average throughout the 1950s.

Briggs had four manufacturing plants in the Milwaukee area at one time. But the company, which was hurt by an increase in foreign competition in the 1980s, also had a history of conflict with labor unions and over the decades moved much of its manufacturing to other states.

The company also has a history of opening and then closing plants in Wisconsin, Missouri, Kentucky, Tennessee, Alabama and other locations.

Briggs closed its plant in Port Washington in 2008 and its plants in Jefferson and Watertown in 2009.

In 2007, it closed its engine plant in Rolla, Missouri, that once employed up to 800 people moving much of that production to China. In 2012, it announced the closing of a plant in Newbern, Tennessee, resulting in the loss of almost 700 jobs. It also closed its plant in the Czech Republic that year.

The company hasnt hada consistent path in recent years, Hayes said.

Its been, Let me turn this dial and turn that dial, he said.

Trading of Briggs shares was halted Monday morning as the share price hovered at around 77 cents.

Moody's Investors Service downgraded the company's probability of defaulting on $195 million in outstanding debt.

"The downgrades reflect Briggs & Stratton's substantial earnings decline and inability to generate positive annual free cash flow which, exacerbated by the coronavirus outbreak, accelerated the company's missed interest payment and ultimately, bankruptcy filing," Moody's Vice President Gigi Adamo said in a statement.

"Absent the bankruptcy filing, the expiration of the missed interest payment grace period on the company's $195 million outstanding notes due December 2020 would have allowed noteholders to accelerate the payment of principal and accrued interest," Adamo added.

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Briggs & Stratton files for bankruptcy protection, plans to sell assets and continue operating - Milwaukee Journal Sentinel

Legendary German Formula One driver Michael Schumacher took Ferrari to five world championships on ... [+] BBS wheels, to add to his two championships with Benetton. Photo by Martin Rose/Bongarts/Getty Images

Formula One and Indycar supplier BBS GmbH filed for bankruptcy protection in Germany today for the third time in 13 years, on the eve of its 50th anniversary.

Its contract to supply wheels for next years entire Nascar Cup Series field is not believed to be at risk, with BBS purchasing them off its key Formula One supplier, Japans Washibeam.

BBS, which made the poster wheels for every race- and sports-car fan in the 1990s, has taken some of the worlds most famous drivers to victory everywhere from Le Mans and Indianapolis to Formula One.

They were the aftermarket wheel of choice for generations of performance-car owners and made of the poster wheels for every race- and sports-car fan in the 1990s.

Most of the Indycar Series field uses BBS wheels. Photo: Stacy Revere/Getty Images

Famous for their invention of three-piece racing wheels and criss-cross spoke patterns, BBS GmbH announced its bankruptcy on its website today, describing it as a necessary step to prevent an imminent insolvency.

Blaming its troubles on the Coronavirus pandemic, BBS stated it found itself in financial trouble due to the sudden omission of confirmed payments.

The ancestors of the BBS Super RS design graced thousands of sports car posters in the 1980s and ... [+] 1990s. Photo: BBS

This is not new territory for BBS, which declared bankruptcy in 2007 as well, before being rescued by Belgiums Punch International, and then declared bankruptcy again in 2011 before being taken over by South Koreas Nice Corp.

BBS wheels are found on road cars from Ferrari, Porsche, Mercedes-Benz, Audi, BMW, Volkswagen, Toyota, Volvo, Lexus, Jaguar, Infiniti, Rolls-Royce and Subaru.

BBS went in a different design direction for the Lexus ISF wheel. Photo by Spencer Weiner/Los ... [+] Angeles Times via Getty Images

It once dominated high-end performance car wheels, including the Ferrari F40, the Lexus IS-F and an untold numbers of Porsches.

The market slowdown that came with the Covid-19 pandemic forced BBS to shutter both of its production plants, leading to the bankruptcy filing in the court in Rottweil (yes, like the dog).

Being traceable to the currently tough market environment in the automotive branch, BBS situation deteriorated further due to the Corona(sic)-Lockdown which led to a temporary shutdown of the production at both BBS plants, the companys statement read.

However, the key message we want to deliver to you is that the BBS production keeps on running the supply of all our OE and AM customers with BBS wheels is secured!

Prior to the insolvency BBS already initiated an extensive turnaround strategy for the whole company. This new strategy based on BBS AM wheels as focal point will be continued under the guidance of the insolvency administrator.

One of its two administrators, Thomas Oberle, has been here before with BBS, having been appointed as an administrator of BBS International GmbH in 2011, before BBS became BBS GmbH.

Read more:

Another Bankruptcy For Germanys BBS Wheels As It Turns 50. - Forbes

By Cullen Browder, WRAL anchor/reporter

Raleigh, N.C. The coronavirus pandemic has wreaked havoc on North Carolina's economy:

WRAL Investigates found that those investments have paid off on at least one front so far personal bankruptcies are down in North Carolina. But that safety net could soon run out.

"We're seeing a big uptick in Chapter 11 filings, the corporate reorganizations," said Ciara Rogers with Campbell University's Norman Adrian Wiggins School of Law.

Rogers, who studies bankruptcy trends in North Carolina, said many of those companies were already on shaky ground before the coronavirus. Big brands like GNC, Brooks Brothers and Chuck E. Cheese recently filed for bankruptcy protection. Small businesses are also feeling pinched, she said.

"Some restaurants have started to file," she said.

Despite the struggling economy, there hasn't been a spike in consumer bankruptcy cases yet.

WRAL Investigates went through bankruptcy cases across North Carolina from mid-March, when restaurants were first shut down, to the end of June. During that time, there were 2,612 bankruptcy filings in North Carolina, compared with 3,683 during the same period last year.

"A lot of that has to do with the various federal, state and local government programs that are still helping people get through," Rogers said.

Those programs include the federal mortgage protection program, the Paycheck Protection Program, extended unemployment benefits and the extra $600 a week in unemployment that is set to on Saturday.

Rogers predicted personal bankruptcies could explode later this year if some of those programs aren't extended.

Congress continues to debate plans to extend relief.

One proposal in the Senate would continue the $600-a-week aid package but reduce it based on the unemployment rate in individual states. Protection on federally backed mortgages is also set to expire in September unless lawmakers take action.

Rogers said she hopes people have been smart with their money.

"That [extra unemployment benefit] allowed people to hopefully plan ahead and allow them to stay afloat for a little longer than they otherwise would have been able to do," she said. "What I think we'll see toward the end of 2020 is interest rates will remain low, but credit may become more unavailable or difficult to get, and that's going to push more people into bankruptcy."

With no end in sight for the pandemic, she said people need to look for financial solutions now.

"Don't stick your head in the sand," she said. "Now is the time to make those tough decisions. Now is the time to see if this business model you've been using is working."

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Unemployment is up in NC, but bankruptcies are down - so far - WRAL.com

As the coronavirus pandemic upends the restaurant industry, some chains that were already struggling financially have been pushed into bankruptcy.

Trade groups estimate that up to 30% of restaurants could permanently close because of the pandemic. While independent restaurants are more at risk, dining room closures and consumers eating more at home has also strained chains, particularly those in the casual dining sector.

The Paycheck Protection Program provided many restaurants, including large chains like P.F. Chang's and Five Guys, with much needed funds to continue operating. But coronavirus cases are once again surging, causing governors to once again close dining rooms to customers.

The crisis will likely change the restaurant industry forever. Experts say that the pandemic and related health concerns may prove to be the death knell for buffet-style restaurants, and the once-thriving "eatertainment" segment is under pressure.

A report from S&P Global Market Intelligence released on Friday identified 15 publicly traded restaurant chains that are most likely to default. Kisses From Italy, a casual dining chain whose shares are trading for 10 cents, topped the list, with a 41.2% chance of defaulting within the next 12 months. Muscle Maker, with a 36.9% chance of default, and Giggles N' Hugs, with a 34.3% chance, came in second and third place.

Starbucks, Denny's and Yum Brands made the S&P list with a much smaller probability of default in a year: all came in under 10%.

But franchisees of large fast-food chains are also struggling.Operators across chains like McDonald's, Wendy's and Yum Brands' Taco Bell received millions in PPP loans. NPC International, Pizza Hut's largest U.S. franchisee, filed for Chapter 11 on July 1 after struggling with its debt burden.

Here are the restaurant chains that have filed for bankruptcy during the pandemic:

A sign is posted on the exterior of a Chuck E. Cheese's restaurant on June 25, 2020 in Pinole, California.

Justin Sullivan | Getty Images

Chuck E. Cheese's parent company filed for Chapter 11 bankruptcy in late June, citing the prolonged venue closures stemming from the pandemic for its financial troubles. The chain had $1.91 billion in liabilities on its balance sheet, as of Dec. 29. The company plans to continue operating as it undergoes the bankruptcy process.

In 2014, private equity firm Apollo Global Management bought CEC Entertainment, which also owns Peter Piper Pizza.

An exterior view of a closed Sweet Tomatoes restaurant amid the spread of the coronavirus on May 10, 2020 in Las Vegas, Nevada.

Ethan Miller | Getty Images

The parent company of buffet-style restaurants Souplantation and Sweet Tomatoes filed for Chapter 7 bankruptcy in May and closed all of its locations permanently. Garden Fresh had an estimated $50 million to $100 million in liabilities, according to its bankruptcy filing. The following month, the company liquidated its assets.

A pedestrian wearing a protective mask walks past a closed Le Pain Quotidien restaurant in Arlington, Virginia, U.S., on Wednesday, May 27, 2020.

Andrew Harrer | Bloomberg | Getty Images

In late May, the U.S. arm of Le Pan Quotidien, PQ New York, sought Chapter 11 bankruptcy protection. The company had planned to file for bankruptcy prior to the pandemic, but restaurant closures nearly caused it to liquidate, according to court filings. PQ New York had an estimated $100 million to $500 million in liabilities when it filed for bankruptcy.

New York-based restaurant operator Aurify Brands bought all 98 U.S. locations of the restaurant and plans to reopen at least 35.

The logo of restaurant chain Vapiano is pictured at a restaurant in Berlin, on April 2, 2020.

Odd Andersen | AFP | Getty Images

In April, the German restaurant chain applied to start insolvency proceedings in Cologne. The company is publicly traded on the Frankfurt Stock Exchange and has six U.S. locations. When Vapiano went public in 2017, it had a market value of about 553 million euros, or more than $630 million.

West Palm Beach, CityPlace, Brio Tuscan Grille outdoor tables.

Jeff Greenberg | UIG | Getty Images

The parent company of Brio and Bravo restaurants filed for Chapter 11 bankruptcy in April and permanently shuttered 48 out of nearly 100 locations. FoodFirst said it had liabilities of $50,000 or less in its bankruptcy filing.

In June, Earl Enterprises, which owns Planet Hollywood and Earl of Sandwich, bought the two Italian restaurant chains in a deal valued at $30 million and plans to assume the leases of at least 45 locations.

Correction: An earlier version misidentified the source of the report. It was from S&P Global Market Intelligence.It also misstated the market value of Vapiano when it went public. It was worth more than $630 million.

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These restaurant chains filed for bankruptcy during the pandemic - CNBC

(Reuters) - Nearly a third of more than 40 large companies seeking U.S. bankruptcy protection during the coronavirus pandemic awarded bonuses to executives within a month of filing their cases, according to a Reuters analysis of securities filings and court records.

Under a 2005 bankruptcy law, companies are banned, with few exceptions, from paying executives retention bonuses while in bankruptcy. But the firms seized on a loophole by granting payouts before filing.

Six of the 14 companies that approved bonuses within a month of their filings cited business challenges executives faced during the pandemic in justifying the compensation.

Even more firms paid bonuses in the half-year period before their bankruptcies. Thirty-two of the 45 companies Reuters examined approved or paid bonuses within six months of filing. Nearly half authorized payouts within two months.

Eight companies, including J.C. Penney Co Inc and Hertz Global Holdings Inc, approved bonuses as few as five days before seeking bankruptcy protection. Hi-Crush Inc, a supplier of sand for oil-and-gas fracking, paid executive bonuses two days before its July 12 filing.

J.C. Penney - forced to temporarily close its 846 department stores and furlough about 78,000 of its 85,000 employees as the pandemic spread - approved nearly $10 million in payouts just before its May 15 filing. On Wednesday, the company said it would permanently close 152 stores and lay off 1,000 employees.

The company declined to comment for this story but said in an earlier statement that the bonuses aimed to retain a talented management team that had made progress on a turnaround before the pandemic.

The other companies declined to comment or did not respond. In filings, many said economic turmoil had rendered traditional compensation plans obsolete or that executives getting bonuses had forfeited other compensation.

Luxury retailer Neiman Marcus Group in March temporarily closed all of its 67 stores and in April furloughed more than 11,000 employees. The company paid $4 million in bonuses to Chairman and Chief Executive Geoffroy van Raemdonck in February and more than $4 million to other executives in the weeks before its May 7 bankruptcy filing, court records show. Neiman Marcus drew scrutiny this week on a plan it proposed after filing for bankruptcy to pay additional bonuses to executives. The company declined to comment.

Hertz - which recently terminated more than 14,000 workers - paid senior executives bonuses of $1.5 million days before its May 22 bankruptcy, in part to recognize the uncertainty they faced from the pandemics impact on travel, the company said in a filing.

Whiting Petroleum Corp bestowed $14.6 million in extra compensation to executives days before its April 1 bankruptcy. Shale pioneer Chesapeake Energy Corp awarded $25 million to executives and lower-level employees in May, about eight weeks before filing bankruptcy. Both cited fallout from the pandemic and a Saudi-Russian oil price war, which they said rendered their incentive plans ineffective.

Reuters reviewed financial disclosures and court records from 45 companies that filed for bankruptcy between March 11, the day the World Health Organization declared COVID-19 a pandemic, and July 15. Using a database provided by BankruptcyData, a division of New Generation Research Inc, Reuters reviewed companies with publicly trade stock or debt and more than $50 million in liabilities.

Such bonuses have long spurred objections that companies are enriching executives while cutting jobs, stiffing creditors and wiping out stock investors. In March, creditors sued former Toys R Us executives and directors, accusing them of misdeeds that included paying management bonuses days before its 2017 bankruptcy. The retailer liquidated in 2018, terminating more than 31,000 people.

A lawyer for the executives and directors said the bonuses were justified, given the extra work and stress on management, and that Toys R Us had hoped to remain in business after restructuring.

In June, congressional Democrats responded to the pandemic-induced wave of bankruptcies by introducing legislation that would strengthen creditors rights to claw back bonuses. The bill - the latest iteration of a proposal that has long failed to gain traction - faces slim prospects in a Republican-controlled Senate, a Democratic aide said.

Firms paying pre-bankruptcy bonuses know they would face scrutiny in court on compensation proposed after their filings, said Clifford J. White III, director of the U.S. Trustee Program, a Justice Department division charged with monitoring bankruptcy proceedings. But the trustees have no power to halt bonuses paid even days before a companys bankruptcy filing, he said, allowing firms to escape the transparency and court review.

The 2005 legislation required executives and other corporate insiders to have a competing job offer in hand before receiving retention bonuses during bankruptcy, among other restrictions. That forced failing firms to devise new ways to pay the bonuses, according to some restructuring experts.

After the 2008 financial crisis, companies often proposed bonuses in bankruptcy court, casting them as incentive plans with goals executives must meet. Judges mostly approved the plans, ruling that the performance benchmarks put the compensation beyond the purview of the restrictions on retention bonuses. The plans, however, sparked objections from Justice Department monitors who called them retention bonuses in disguise, often with easy milestones.

Eventually, companies found they could avoid scrutiny altogether by approving bonuses before bankruptcy filings. Dozens of companies have approved such payouts in the last five years, said Brian Cumberland, an executive compensation expert at consulting firm Alvarez & Marsal who advises companies undergoing financial restructurings.

Companies argue the bonuses are crucial to retaining executives whose departures could torpedo their businesses, ultimately leaving less money for creditors and employees. Now, some companies are bolstering those arguments by contending that their business would not have cratered without the economic turmoil of the pandemic.

The pre-bankruptcy payouts are needed, companies say, because potential stock awards are worthless and it would be impossible for executives to meet business targets that were crafted before the economic crisis. The bonuses ensure stability in leadership that is needed to hold faltering operations together, the firms contend.

Some specialists argue the bonuses are hard to justify for executives who may have few better job options in an economic crisis.

With double-digit unemployment, its a strange time to be paying out retention bonuses, said Adam Levitin, a professor specializing in bankruptcy at Georgetown Universitys law school.

J.C. Penney has not posted an annual profit since 2010 as it has struggled to grapple with the shift to online shopping and competition from discount retailers. The 118-year-old chain, at various points, employed more than 200,000 people and operated 1,600 stores, figures that have since been cut more than half.

On May 10, J.C. Penneys board approved compensation changes that paid top executives, including CEO Jill Soltau, nearly $10 million. On May 13, Soltau received a $1.7 million long-term incentive payment and a $4.5 million retention bonus, court filings show.

The annual pay of the companys median employee, a part-time hourly worker, was $11,482 in 2019, a company filing shows.

J.C. Penney filed for bankruptcy two days after paying Soltaus bonuses. At a hearing the next day, a creditors lawyer argued the payouts were designed to thwart court review. The payouts were timed so that they didnt have to put it in front of you, said the lawyer, Kristopher Hansen, addressing U.S. Bankruptcy Judge David Jones.

Jones - who is also overseeing the Whiting Petroleum, Chesapeake Energy and Neiman Marcus cases - told Reuters that such bonuses are always a concern in bankruptcy cases. That said, the adversarial process demands that parties put the issue before me before I can take action, he added, emphasizing he was speaking of general dynamics applicable to any case. A comment made in passing by a lawyer is not sufficient.

In its statement earlier this year, J.C. Penney said the bonuses were among a series of tough, prudent decisions taken to safeguard the firms future.

Dennis Marten - a shareholder who said he once worked at a J.C. Penney store - disagrees. He has appeared at court hearings pleading for an investigation of the companys leadership.

Shame on her for having the gall to get that money, he said of Soltau.

Reporting by Mike Spector and Jessica DiNapoli; Editing by Brian Thevenot

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On eve of bankruptcy, U.S. firms shower execs with bonuses - Reuters

White House trade adviser Peter Navarro says his mission is to make sure Americans get gloves, goggles, ventilators and other materials they need.

Within a few years of starting FedEx, Fred Smith made a realgamble to keep the company afloat.

Smith founded the Federal Express in 1971 and it began operations in 1973. The company was based on an idea he wrote about in a term paper in 1965 while he was an undergraduate student at Yale.

In his paper, he explained how companies could deliver items faster if they changed their shipping strategies, according to the FedEx website. However, Smiths professor didnt think the idea was possible, so Smith's paper was only given a C, Entrepreneur magazine reported in 2008.

HOW JEFF BEZOS HELPED AMAZON OVERCOME A MAJOR COMPETITOR TO BECOME AN E-COMMERCE GIANT

Smith wasn't deterred. After he graduated from Yale and served in the Marine Corps for two tours of duty in Vietnam, Smith bought controlling interest in Arkansas Aviation Sales in 1971, the FedEx website said.

With his new company, Smith realized how difficult it was to ship items within a few days, so he decided it was time to try to put his Yale term paper to use.

According to Entrepreneur, Smith raised $80 million in loans and equity investments by the end of 1972.

FedEx founder and CEO Fred Smith is also a part owner of the Washington Redskins. (Redskins.com)

FedEx began operations in April 1973 and quickly grew. However, rising fuel costs eventually caught up with the young company, putting FedEx millions of dollars in debt, Entrepreneur reported.

Investors declined to give FedEx more money and Entrepreneur reported that "bankruptcy was a distinct possibility."

When the company had only $5,000 left, Smith pitched General Dynamics for more funding, but the board refused.

HOW JPMORGANS JAMIE DIMON WENT FROM BEING FIRED TO BECOMING A TOP LEADER IN BANKING

On his way home, Smith took a detour to Las Vegas and won $27,000 playing blackjack, which he wired back to FedEx, Forbes reported.

"The $27,000 wasn't decisive, but it was an omen that things would get better," Smith said about the gamble, according to Entrepreneur.

"I was very committed to the people that had signed on with me, and if we were going to go down, we were going to go down with a fight,"he said. "It wasn't going to be because I checked out and didn't finish."

Fedex CEO Fred Smith is pictured at a business roundtable meeting in 2012. (REUTERS/Jason Reed/File Photo)

After his blackjack win, Smith was able to raise another $11 million, the magazine reported. And by 1976, FedEx's revenue had reached $75 million, according to Forbes. The company went public two years later.

According to the company website, FedEx reported $1 billion in revenue in 1983. Though it was hit hard by the 2008 recession, the company has bounced back.

According to Forbes, the company made $69.7 billion in revenue last year.

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Smith, who is still the CEO and chairman of FedEx, is estimated to be worth $3.9 billion, according to Forbes real-time net worth calculator.

Though gambling FedExs last $5,000 was a risky choice, Smith doesn't appear to regret his decision, according to a quote from an essay by Smith that Forbes published in 2017.

"No business school graduate would recommend gambling as a financial strategy, but sometimes it pays to be a little crazy early in your career, Smith wrote.

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How Fred Smith rescued FedEx from bankruptcy by playing blackjack in Las Vegas - Fox Business

Recent revisions to the U.S. Bankruptcy Code might open the door to headaches and heartaches for landlords that rent to small businesses.

In August 2019, Congress created whats known as Subchapter 5 of the Bankruptcy Code. Subchapter 5 is designed to streamline the Chapter 11 bankruptcy process for small businesses and slash their legal bills, according to Robert Dremluk, a partner in the New York City office of law firm Culhane Meadows Haughian & Walsh PLLC who specializes in bankruptcy cases.

Subchapter 5 went into effect this February. A month later, Congress tweaked Subchapter 5 as part of the federal CARES Act, aimed at helping the U.S. recover from the coronavirus pandemic. A major change in Subchapter 5 that will be on the books till next spring raises the cap on secured and unsecured debts for a small business to qualify for Chapter 11. The threshold jumped from a little over $2.7 million to $7.5 million. The idea was to create an easier path for companies to reorganize, Dremluk says.

Legal observers say the re-engineered Subchapter 5 could invite even more small businesses to file for Chapter 11 bankruptcy reorganization and, therefore, entangle more landlords in bankruptcy proceedings.

Other provisions of Subchapter 5 might also entice small businesses to head to bankruptcy court. They include:

The debtor-friendly Subchapter 5 makes no mention of landlords, notes Katey Anderson Sanchez, a bankruptcy attorney in the Phoenix office of law firm Ballard Spahr LLP. However, she adds that some businesses that in the past might have shied away from Chapter 11 bankruptcy now might find this path more worthwhile. In turn, that could put more landlords in the crosshairs of small business bankruptcies. How so? For one thing, Subchapter 5 weakens the power of a landlord or any other creditor to stop a reorganization plan from being finalized.

Sanchez notes, though, that landlords retain a lot of rights in Chapter 11 cases filed by tenants. She sees nothing in the Subchapter 5 language itself that should give a debtor a definitive edge over a landlord.

Landlords are in a really good position to say, Hey, you know youve got to pay us, Sanchez says. Theres no additional ability for a small business owner to change the terms of a lease or anything like thatnot any more than there is any other chapter of the code.

Through the lens of Subchapter 5, Dremluk sees some positives for landlords. Primary among them is that letting a small business restructure its debt under Subchapter 5 means that a tenant might stand a better chance of keeping its doors open and keeping up with its lease obligations, he notes. He adds that Subchapter 5 paves the way for more small businesses to negotiate with landlords, since some cash-strapped tenants previously found it too expensive to plow through the Chapter 11 bankruptcy process.

From his perspective, Neal Salisian, founder and co-managing partner of Los Angeles law firm Salisian Lee LLP, says the recent changes in the Bankruptcy code could lead to debtors leases being ripped up. He frequently represents commercial real estate landlords and lenders.

The way that would work is that the tenant could be in a particular space, not paying rent during a moratorium, and have other financial issues during that time that result in a bankruptcy filing. At this point, the whole lease would fall under the proceedings and likely get invalidated, Salisian says. Ultimately, this could be very bad combination of factors for a landlord, leading to months and months of unpaid rent and unoccupied space.

The result of that sort of scenario could be bankruptcy declarations on the part of the landlords themselves, Salisian says.

It remains to be seen how widely Subchapter 5 will be used by small businesses, according to Rory Vohwinkel, a bankruptcy attorney with Las Vegas law firm Vohwinkel & Associates Ltd. For the most part, small businesses are holding off on bankruptcy filings due to uncertainty over their current and future finances, attorneys say. However, legal observers anticipate a near-tsunami of small business bankruptcies to start when that uncertainty subsides.

Once those impediments go away, I think youll see an upsurge in the use of Subchapter 5, Dremluk says. I think a lot of small businesses that have hung on though COVID will see this as an opportunity to clean up their balance sheets, reorganize their business and go forward. But currently, the environment is not really suitable for that.

Vohwinkel and other attorneys are closely watching a Chapter 11 case thats already being pursued under Subchapter 5. Texas-based restaurant chain Texas Root Burger hopes to reorganize through Chapter 11 and to walk away from some of its locations, the Wall Street Journal reported. The newspaper points out that Subchapter 5 might force creditors like landlords to quickly head to the negotiating table with tenants that have filed for bankruptcy under Chapter 11.

We are all waiting to see how that case proceeds, as it could be precedent-setting, Vohwinkel says.

As the business community at large adopts a wait-and-see attitude about the coronavirus pandemic and corporate finances, Dremluk suggests that landlords educate themselves about Subchapter 5.

My recommendation would be for landlords to understand the process, become familiar with how it works, how its different from what you might have understood the process to be, he says. A landlord whos asleep at the wheel potentially could end up losing their rights, whatever they may be.

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How Will Revisions to the US Bankruptcy Code Impact Landlords? - National Real Estate Investor

The first case of coronavirus in the United States was confirmed on Jan. 21, in Washington. Since then, the virus has rapidly taken a toll.

EDITOR'S NOTE:This story is written as a reflection on the last six months of the pandemic and its impact in the United States. It is written from the virus's perspective.

My name is SARS-CoV-2. You might know me better as the novel coronavirus. Its been six months since I made it to the United States.

This is how Ive changed your life and your world in such a short time.

I was first confirmed in the United States on Jan. 21, when a man in Washington tested positive.

In the beginning, I caused shortness of breath, fever, and coughing. Then, people started losing their senses of taste and smell.

On Feb. 11, 21 days after I was found in the United States, scientists named a new disease after me. COVID-19.

In that first 21 days, I infected 12 people in the U.S.

65 days later, on March 27, I had infected more than 100,000 people.

The average patient was between 50 and 60 years old.

Over the next 65 days, I had infected a total of more than 1.8 million people - an increase of more than 1664% compared to the previous 65 days.

By July 7, more than three million people were infected. The average patient's age dropped to 33 years old.

I am a virus. I spread easily on ships, on trains and on planes.

Fewer people were traveling, so airlines had to cut their flight schedules.

On April 14, 84,000 people went through TSA checkpoints at U.S. airports - a 96% drop from the same day last year. By June 1, U.S. airlines cut global routes by nearly 75%.

Governments put shutdowns into place hoping to stop the spread. That's when I began taking a toll on jobs.

From mid-March to the first week of July, more than 48 million people filed for unemployment. The national unemployment rate went from 3.5% in February to 14.7% in April to more than 11% in June.

I took a toll on your businesses. Nearly 100 companies with more than 500 employees have filed for bankruptcy.

Household names like J. Crew, JCPenney and Neiman Marcus sought relief from the burden of billions of dollars in debt and no sign of a customer comeback. Brooks Brothers, a 200-year-old company, turned to bankruptcy because of a six-month-old pandemic.

I took a toll on your stock market. During the last week of February, stock markets worldwide saw their largest one-week losses since the 2008 financial crisis. By June, markets rebounded. But, instability remained.

As months went by, states began to reopen to help save businesses.

Texas started reopening in April. First, it was retail-to-go. Then, dining indoors. And bars reopened.

You started going out. I started to spread faster.

It took me 76 days to infect the first 50,000 people in Texas. It took me just 31 more days to hit 100,000 cases. 11 days after that, Texas crossed 150,000 cases. It took only eight more days to reach 200,000 cases in Texas.

There are people who recover from my virus.

In the six months that Ive been in the United States, an estimated 953,000 people have recovered.

But, doctors are still figuring out what recovery looks like because scientists are watching me transform. Doctors dont know if youre immune to me after youre infected.

Scientists are making progress on a vaccine. At least one vaccine has shown a positive response in patients. But, until a vaccine gets approved, you will continue to fight to stop my spread.

Some of you will social distance. Others wont.

Some of you will wear a mask. Others wont.

Some of you will stay home. Others wont.

You might know me better as the novel coronavirus.

Six months ago, I made it to the United States.

180 days later, one thing is clear.

Ive changed your lives forever.

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Social distancing, masks and business bankruptcies: We just hit 6 months of coronavirus in US - WFAA.com