Category Archives: Bankruptcy

As discussed in previous posts, the Consolidated Appropriations Act of 2021 (the Act) was signed into law on December 27, 2020, largely to address the harsh economic impact of the COVID-19 pandemic. For bankruptcy litigators or any business which has been frustrated to receive a demand letter after one of its customers filed bankruptcy one particular amendment stands out in the sprawling 5,593-page bill. The Act amended Section 547 of the Bankruptcy Code to provide suppliers and landlords with an additional potential challenge to actions brought to claw back payments made by a debtor in the 90 days preceding bankruptcy.

Generally speaking, Section 547 of the Bankruptcy Code enables a bankruptcy trustee (or debtor-in-possession) to claw back certain payments made by a debtor to its creditors in the 90 days preceding a bankruptcy case, unless the creditor can establish one of the statutory defenses, including: (1) the payment was made at the same time as the creditor provided goods or services to the debtor (i.e., a contemporaneous exchange); (2) the payment was made in the ordinary course of business (i.e., in the same manner as payments were made before the debtor experienced financial distress) or according to ordinary business terms; or (3) the creditor provided additional goods and services to the debtor on credit after receiving the payment. The purpose of Section 547 is to prevent creditors from racing to dismantle a financially distressed company, and more importantly, to ensure certain creditors are not receiving preferential treatment by the company while others are left holding the bag.

The Act added a new subsection 547(j) to the Bankruptcy Code, generally providing that a trustee (or debtor-in-possession) may not avoid and recover as a preferential transfer:

This new provision, which sunsets on December 27, 2022, is subject to certain limitations, including:

The policy objectives underlying new Section 547(j) seem apparent: (i) ensuring landlords and suppliers are not penalized for accepting deferred payments (out of the ordinary course) under arrangements they have entered into with businesses hit hard by the global pandemic, and (ii) incentivizing landlords and suppliers to explore financial accommodations with their distressed counterparties going forward, instead of exercising default and termination rights under existing agreements. While salutary, these policy objectives are, to some extent, in conflict with Section 547s general purpose of ensuring equal distributions for all creditors of businesses in distress. Notably, the statute does not protect certain types of creditors such as lenders even though an agreement by any creditor to accept a deferred payment would, presumably, benefit a distressed business just as much as a suppliers or landlords agreement to do so.

In any event, the actual language adopted by Congress leaves plenty of room for interpretation. For instance, a payment to a supplier must be made pursuant to an executory contract. But it is unclear whether the contract need still be executory on the petition date. If the supplier accepts an otherwise exempt deferred payment and then terminates the contract prior to bankruptcy, does the supplier still have the benefit of Section 547(j)?

In addition, it is likely the courts will face questions regarding what constitutes a deferral agreement or arrangement for purposes of the statute, and whether such agreement or arrangement qualifies for protection if deferring or postponing payment of arrearages is part of a larger agreement to restructure the parties business relationship involving various forms of consideration. Finally, the language of the statute may leave room for parties to potentially game the system. For instance, Section 547(j) is an exception from the avoidance power under 547(b), not a defense, meaning payments to insider landlords and suppliers during the year preceding the bankruptcy appear to also be subject to the exemption. Thus, affiliated companies with intercompany debts may be incentivized to enter into friendly agreements to defer payments for the purpose of ensuring catch-up payments are exempted from avoidance.

Only time (and the courts) will tell whether this new provision will accomplish the intended Congressional objectives, and what avenues parties may exploit to take advantage of this otherwise well-intentioned response to the fallout from the coronavirus pandemic. In the meantime, landlords and suppliers who have deferred payments during the pandemic should ensure they document these deferrals and avoid charging interest or penalties prohibited by statute in order to take advantage of Section 547(j) should their tenant or customer file bankruptcy.

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Consolidated Appropriations Act of 2021 Amends Bankruptcy Code - Part 3: Congress Gives Suppliers and Landlords a Shiny New Arrow in their Quiver to...

PETITIONS OF THE WEEK ByAndrew Hamm on Feb 5, 2021 at 5:59 pm

This week we highlight cert petitions that ask the Supreme Court to consider, among other things, the discharge of student-loan debt for undue hardship and the statute of limitations for IDEA child-find violations.

The Bankruptcy Code allows the discharge of student-loan debt if repayment would cause the borrower undue hardship. The U.S. courts of appeals, however, apply different tests to decide what counts as an undue hardship. One test tries to look holistically at the totality of the circumstances. In McCoy v. United States, however, the U.S. Court of Appeals for the 5th Circuit applied what is known as the Brunner test. This three-part test requires someone with student loans to show: (1) that [she] cannot maintain, based on current income and expenses, a minimal standard of living for herself and her dependents if forced to repay the loans; (2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and (3) that [she] has made good faith efforts to repay the loans. Because Thelma McCoy had secured a part-time job, among other things, the 5th Circuit found that she did not satisfy the Brunner tests second prong. Arguing that the circuit split is often outcome-determinative, McCoy asks for the justices review.

Independent School District No. 283 v. E.M.D.H. ex rel. L.H. and S.D. presents the justices with a procedural question under the Individuals with Disabilities Education Act: How long do parents have to complain about a school districts alleged failure to provide a free appropriate public education to a child with a disability? The statute gives parents two years, but a question remains as to when the two-year clock starts running. In this case, a Minnesota child with various psychological disorders entered a psychiatric day-treatment facility in May 2015. In June 2017, the childs parents filed an administrative complaint that the district had failed in its child-find obligation, a districts duty to ensure [a]ll children with disabilities residing in the State are identified, located, and evaluated. In response, the district argued that two years had elapsed. However, the U.S. Court of Appeals for the 8th Circuit ruled that the violation was not isolated to May 2015 but continued day after day into the limitations period. In its petition, the district argues that this decision created a circuit split and asks for the justices review.

These and otherpetitions of the weekare below:

McCoy v. United States20-886Issue: Whether the U.S. Court of Appeals for the 5th Circuit erred in applying the test fromBrunner v. New York State Higher Education Services Corp., which prohibits discharge unless the debtor can prove, among other things, a total incapacity to repay the debt in the future, instead of the totality test to determine whether a debtor would suffer an undue hardship absent discharge of her student loan debt.

Independent School District No. 283 v. E.M.D.H. ex rel. L.H. and S.D.20-905Issue: Whether the continuing-violation doctrine applies to the two-year statutory time limit to file an administrative complaint under theIndividuals with Disabilities Education Act.

Alaska v. Wright20-940Issue: Whether, when an offender has fully served the sentence imposed pursuant to a state conviction, a federal habeas court has jurisdiction to consider a28 U.S.C. 2254challenge to that conviction merely because it served as a predicate for an independent federal conviction under which the offender is now in custody.

Atkins v. Williams20-941Issues: (1) Whether the unavailability of funds or other resources negates the subjective component of a deliberate indifference claim under the Eighth Amendment; and (2) whether, if lack of funds is a valid defense at all, a defendant can assert this defense when sued in his or her official capacity for injunctive relief.

Stewart v. City of Euclid, Ohio20-951Issue: Whether, when a municipal employee has violated the Constitution, a plaintiff must point to clearly established law (such as would overcome a defense of qualified immunity by an individual officer) in order to prove deliberate indifference for municipal liability purposes.

Ellis v. Liberty Life Assurance Company of Boston20-953Issue: What the correct test to apply is in deciding whether an otherwise applicable state lawhere, a state law prohibiting discretion-conferring provisions in insurance contractscan be displaced by an Employee Retirement Income Security Act of 1974 plans choice-of-law clause.

Owens v. Stirling20-975Issues: (1) For claims of ineffective assistance of trial counsel, what standard is to be used by federal courts of appeals for determining whether the underlying constitutional claim is substantial underMartinez v. Ryan, and how does it relate to the determination that a petitioner has met the requirements to obtain a Certificate of Appealability, under28 U.S.C. 2253(c)and as described by the Supreme Court inMiller-El v. Cockrell; and (2) whether, under theMartinezstandard, it is proper for courts of appeals determining the substantial quality of the underlying constitutional claim to rely on an imbalanced consideration of the record, including ignoring evidence in the record in support of a petitioners underlying constitutional claimas happened in Freddie Owenss case.

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Student-loan discharges in bankruptcy and public education for disabled kids - SCOTUSblog - SCOTUSblog

(Reuters) - U.S. shale oil and gas producer Chesapeake Energy Corp plans to cut 15% of its workforce, an email sent to employees revealed, as it closes on new financing that will allow it to emerge from bankruptcy court protection next week.

Once the second-largest U.S. natural gas producer, Chesapeake was felled by a long slide in gas prices. The company is resetting our business to emerge a stronger and more competitive enterprise, according to the email to employees by Chief Executive Doug Lawler dated Tuesday, and reviewed by Reuters.

Most of the 220 layoffs will happen at the Oklahoma City headquarters, the email said.

Chesapeake on Tuesday said it planned to raise $1 billion in notes to complete its bankruptcy exit.

The companys bankruptcy plan was approved by a U.S. judge last month, giving lenders control of the firm and ending a contentious trial.

Chesapeake filed for court protection in June, reeling from overspending on assets and from a sudden decline in demand and prices spurred by the coronavirus pandemic.

As we prepare to conclude our restructuring, we continue to prudently manage our business and staffing levels to adapt to challenging market conditions and position Chesapeake for sustainable success, company spokesman Gordon Pennoyer said by email, when asked about the planned layoffs.

People losing their jobs will be given severance packages and career assistance, according to Lawlers email. The companys headquarters was closed on Wednesday and workers were notified by phone about layoffs because of the current health concerns known to all, the email said.

Reporting by Jennifer Hiller; editing by Richard Pullin and Marguerita Choy

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Chesapeake Energy cuts 15% of workers as it emerges from bankruptcy - Reuters

This year started where 2020 finished, with another bankruptcy record.

Some 56 New Hampshire individuals and businesses filed for bankruptcy in January, the lowest number seen in any January indeed, any month since January 1988. The total was 11 fewer than December 2020 and four fewer than November 2020.

The low number of bankruptcies persists despite the resurgence of the pandemic in December and January and the states relatively high unemployment, particularly in the hospitality industry, with some restaurants and hotels going into hibernation following a muted Christmas.

Bankruptcy filings in the state have been in the double digits for 10 straight months, dropping in April just after the pandemic first struck and after a generation of monthly bankruptcy filings in the hundreds.

For months, bankruptcy attorneys have predicted an increase in filings, but that hasnt happened. Businesses and individuals, bolstered by federal and state aid and sheltered from most evictions and foreclosures, have managed to hang on, with the hope of future assistance or an easing of the pandemic as the vaccine rollout continues. Others particularly brick-and-motor retailers might have been hanging on at least until Christmas before making any decision.

But Christmas is long gone, and most businesses and individuals are not throwing in the towel.

Januarys total is less than a sixth of the 381 that were filed in January 2010, in the midst of the last recession. It was less than half of the 121 filed in January of 2020, a 54% decrease.

In all of total there was a total of 1,054 filings, or an average of 88 a month. In 2019, the total was 1,774, for a monthly average of 148. In 2010 the yearly total was 5,507, or 459 a month. You have to go back to 1988 in the midst of a booming economy to get a lower annual total 835, or 70 a month.

In January there were three bankruptcy filings with business-related debt, but only one was filed by the business directly, and it is conjunction with a sale free and clear of all liens:

Parrillo Designs LLC, dba Derailed Boutique, Kingston, filed Jan. 15, Chapter 7. Assets: $37,405. Liabilities: $82,201.

Originally posted here:

Bankruptcy filings continue their record lows in New Hampshire - New Hampshire Business Review

Background

The Commodity Futures Trading Commission (CFTC) recently adopted final amendments to Part 190 of the CFTC's regulations (the "Final Rules"), governing bankruptcy proceedings with respect to commodity brokers.1 The Final Rules represent the first comprehensive update to the CFTC's bankruptcy rules since the Part 190 rules were initially adopted in 1983. Approved unanimously, the Final Rules serve to modernize and revise the CFTC's regulations to reflect changes in the commodity brokerage industry over that time.

Subchapter IV, chapter 7 of the Bankruptcy Code ("Code") sets out the essential provisions governing the liquidation of a commodity broker in bankruptcy. However, the CFTC is authorized under section 20 of the Commodity Exchange Act (CEA), "notwithstanding the Code," to adopt rules that provide, among other things: (1) that certain cash, securities, other propertyor commodity contracts are to be included in or excluded from customer property or member property; and (2) the method by which the business of such commodity broker is to be conducted or liquidated after the date of the filing of the petition under the Code. Part 190 of the CFTC's regulations are promulgated under this authority as well as the CFTC's general rulemaking authority under section 8a(5) of the CEA.

Since the initial adoption of the Part 190 rules, there have been significant developments in practices with respect to commodity broker bankruptcies, including as a result of judicial decisions and certain high-profile bankruptcies (like that of MF Global Inc. and Peregrine Financial Group Inc.). As emphasized in former Chairman Heath Tarbert's statement in support of the Final Rules, they seek to clarify and codify key principles and approaches or practices that have developed over time as the existing Part 190 rules were applied to real-world bankruptcy situations.

Highlights of the Final Rules

At a high level, the Final Rules address the following major topics:

Statutory Authority, Organization, Core Concepts, Scope and Construction. The Final Rules adopt new CFTC Rule 190.00, which sets forth the statutory authority, organization, core concepts, scope and rules of construction for Part 190 of the CFTC's regulations. In particular, new CFTC Rule 190.00 sets out the CFTC's intent regarding bankruptcies for the benefit of market participants, trustees and the general public.

Default of a Derivatives Clearing Organization. The Final Rules adopt new Subpart C to Part 190 of the CFTC's regulations, which governs the bankruptcy of a DCO. Among other things, new Subpart C provides that the trustee should follow, to the extent practicable and appropriate, the DCO's pre-existing default management rules and procedures and recovery and wind-down plans that have been submitted to the CFTC. These rules, procedures and plans will, in most cases, have been developed pursuant to Part 39 of the CFTC's regulations, subject to CFTC staff oversight. This approach relieves the trustee of the burden of developing, in the moment, models to address an extraordinarily complex situation.

Priority of Customers and Customer Property. The Final Rules clarify that shortfalls in segregated property should be made up from the general assets of the FCM. The Final Rules also clarify that, with respect to customer property, public customers are favored over non-public customers.

Securities Investors Protection Act (SIPA) and Federal Deposit Insurance Corporation (FDIC). The Final Rules confirm the applicability of Part 190 of the CFTC's regulations in the context of an FCM that also is registered with the Securities and Exchange Commission (SEC) as a broker-dealer and subject to a proceeding guided primarily by the SIPA. Likewise, the Final Rules clarify the applicability of Part 190 in the context of a proceeding in which the FDIC is acting as receiver.

Letters of Credit as Collateral. The Final Rules confirm the treatment of letters of credit used as collateral. Specifically, the Final Rules make clear that customers posting letters of credit as collateral will be subject to the same pro rata loss as customers that post other types of collateral, such as cash and securities, both during business as usual and during bankruptcy.The pro-rata loss would be calculated based on the face value of the posted letter of credit, even if only a portion was drawn down by a customer at the time of the bankruptcy.

Greater Trustee Discretion. The Final Rules grant trustees greater discretion by, among other things, permitting the trustees to treat public customers on an aggregated basis. This greater discretion generally favors the cost effective and prompt distribution of customer property over the precision of valuing each customer's entitlements on an individual basis.

Transferring Rather Than Liquidating Customer Positions. The Final Rules further confirm the CFTC's longstanding preference for transferring positions of public customers rather than liquidating the positions.

Reflect Changes to CFTC's Regulatory Framework. The Final Rules update Part 190 of the CFTC's regulations to better reflect changes to the CFTC's regulatory framework over the years, including the CFTC's recent revisions to its customer protection rules. The Final Rules also update cross-references to other CFTC rules.

Changes in Technology. The Final Rules also reflect changes in technology, including a recognition that many records are captured and stored electronically rather than on paper.

Non-Substantive Clarifications. The Final Rules provide non-substantive changes to clarify language in the CFTC's regulations. These clarifications are intended to address ambiguities that have complicated past bankruptcies.

A chart summarizing all of the provisions in the Final Rules is available in this advisory's appendix.

Effective Date of the Final Rules

The Final Rules are effective 30 days after publication in the Federal Register.

Principal Changes From the Proposed Rules and Supplemental Proposed Rules

The Final Rules differ from the proposed amendments2 and supplemental amendments,3 published in the Federal Register on June 12, 2020 and September 24, 2020, respectively, in a few key respects. In particular, the Final Rules clarify in CFTC Rule 190.11 that if a debtor clearing organization is organized outside the United States, then only selected provisions in Part 190 of the CFTC's regulations would apply, including (1) the general provisions in Subpart A to Part 190; (2) the reports and records requirements in CFTC Rule 190.12; and (3) the prohibition on avoidance of transfers in Rule 190.13 and the net equity calculation and treatment of property requirements in Rules 190.17 and 190.18, but only with respect to an FCM clearing member's public customers. The CFTC expressed its rationale in adopting the final scheme as a balance between protecting customers and mitigating conflict with foreign proceedings.

Additionally, the CFTC adopted a simplified CFTC Rule 190.14(b) that is consistent with DCO rules governing the default of the DCO. As originally proposed, Rule 190.14(b) included additional provisions that were intended to provide a brief opportunity, after the order for relief, to enable alternatives (i.e., resolution under Title II of the DoddFrank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act") or the transfer of clearing operations to another DCO) in lieu of liquidation. In response to comments following the Proposed Rules, the CFTC withdrew proposed paragraphs (b)(2) and (b)(3) and issued the Supplemental Proposed Rules with an alternative approach to facilitate the potential resolution of a systemically important DCO under Title II of the Dodd-Frank Act. In adopting the Final Rules, the CFTC determined not to go forward with the Supplemental Proposed Rules. As adopted, Rule 190.14(b) provides only that subsequent to the order for relief, the DCO must cease making calls for variation settlement or initial margin. Relatedly, former Chairman Heath Tarbert noted that the CFTC will engage in "further analysis and development before proposing this, or any other, alternative approach."

Katten's prior advisory, "More Than a Refresh but Much Less Than A Substantial Overhaul: The CFTC Proposes Comprehensive Amendments to Its Bankruptcy Rules," includes a discussion of the Proposed Rules.

See the CFTC's Supplemental Proposed Rules.

_______________

Appendix: Chart Summarizing Changes to Part 190 of CFTC Regulations

Elias Wright, an associate in the Financial Markets and Funds practice and candidate for admission to the New York State bar, contributed to this advisory.

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The CFTC Adopts Comprehensive Amendments to Its Bankruptcy Rules - JD Supra

Law360 (February 5, 2021, 4:23 PM EST) -- A partner in the financial restructuring group at Akin Gump Strauss Hauer & Feld LLP has been appointed as U.S. bankruptcy judge for the Southern District of New York.

The Second Circuit Court of Appeals announced Friday that Lisa G. Beckerman will assume her judicial duties and be sworn in during a private ceremony on Feb. 26.

"After more than two decades at Akin Gump, it is bittersweet to be leaving the firm and my many colleagues and friends here," Beckerman told Law360 Pulse on Friday. "At the same time, though, I am honored to be joining such a distinguished bench...

In the legal profession, information is the key to success. You have to know whats happening with clients, competitors, practice areas, and industries. Law360 provides the intelligence you need to remain an expert and beat the competition.

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Akin Gump Partner Tapped As Bankruptcy Judge In SDNY - Law360

On January 3, 2021, in In re Ditech Holding Corporation, Case No. 19-10412 (JLG), an unpublished opinion, Bankruptcy Judge James L. Garrity, Jr., discussed an important distinction for creditors of a non-individual chapter 11 debtor versus those of an individual debtor.

The essential facts are that prepetition, a creditor, Dr. Nassar, sued Reverse Mortgage Solutions, Inc. (RMS), as mortgage servicer, in Texas, on various legal theories including breach of contract and fraud. Several months later, RMS filed bankruptcy in New York and later confirmed a plan which took effect. Under the plan, Reorganized RMS, as successor to RMS, is now the servicer of Dr. Nassars mortgage.

The problem arose when, post-confirmation, Dr. Nassar continued his lawsuit despite an injunction in the plan prohibiting continuation of prepetition lawsuits like his. Debtor filed a motion to enforce the plan injunction and Dr. Nassar defended, inter alia, based on an alleged violation of due process because, as a known creditor, he was entitled to service of actual notice of the material events in the bankruptcy but was never served with notice of the commencement of the case, the claims bar date, the confirmation hearing or the confirmation order. Debtor had filed notice of the commencement of the bankruptcy and imposition of the automatic stay in the Texas lawsuit but had not served Dr. Nassar. Nonetheless, Dr. Nassar conceded that he knew of the bankruptcy filing before the extended claims bar date and Debtor argued that Dr. Nassars knowledge imposed on him the duty to ascertain the relevant dates and protect his interest in the bankruptcy case. Debtor also had published notice of the confirmation hearing but did not serve Dr. Nassar with actual notice. Debtor did not publish notice of the commencement of the case, the general claims bar date or the confirmation order.

After determining that the court had post-confirmation jurisdiction as the motion to enforce the plan provided a sufficiently close nexus to the plan itself, the court looked at the record. Judge Garrity found that although Dr. Nassar was listed as a creditor with a contingent, disputed and unliquidated litigation claim of an unknown amount, no address was listed and no proof of service of any type was filed listing Dr. Nassars address. Thus, the issue arose of whether Dr. Nassars actual knowledge of the bankruptcy was sufficient to discharge his claim and make him subject to the plan injunction even though he had never been served with formal notice.

Judge Garrity first determined that reasonable notice of the bankruptcy is a required element of due process for a known creditor and that no such notice had been provided to Dr. Nassar. The judge next examined the cases that find informal notice is sufficient to require a creditor to stay informed and comply with deadlines such as filing a claim. However, those cases involve individual debtors, not corporate debtors. Citing Spring Valley Farms, Inc. v. Crow (In re Spring Valley Farms, Inc.), 863 F.2d 832 (11th Cir. 1989), Judge Garrity followed the rationale of the Eleventh Circuit: Section 523(a)(3) places a burden of inquiry upon a creditor only when the debtor is an individual debtor. A corporate debtor is not an individual debtor for the purposes of Section 523. Id. at 834.

There is another aspect to the courts analysis. In large part, the distinction between the burden imposed on a creditor with actual notice of a bankruptcy obtained from a source other than actual service of that notice by a debtor when the debtor is an individual versus a non-individual is based on the Federal Rules of Bankruptcy and how specific they are regarding the due dates for filing proofs of claim. In chapters 7 and 13, the Rules enable a creditor to calculate the approximate date when a proof of claim is due, simply from the date the bankruptcy was filed, by piecing together a combination of Rules. But in chapter 11, Rule 3003(c)(3) requires the court to set the bar date, which occurs after a motion requesting that a date be set. In that circumstance, general knowledge of the bankruptcy filing is not sufficient information to counteract the requirement that a known creditor be provided formal notice prior to barring the creditors claim. The courts ruling is in accord with decisions of the Courts of Appeals in the First, Third, Seventh, Ninth and Eleventh Circuits. Note, however, that the Fifth Circuit ruled otherwise in Robbins v. Amoco Prod. Co., 952 F.2d 901, 908 (5th Cir. 1992) (creditor with both actual and inquiry notice of the bankruptcy proceedings but who failed to take any action to avoid discharge of her claims bound by chapter 11 plan). Accordingly, the Court refused to enforce the discharge injunction against Dr. Nasser.

Practice Point: When representing a creditor who did not receive formal notice of the bankruptcy, be sure to investigate the law in the jurisdiction where the bankruptcy was filed to ascertain your clients right to pursue the claim post-confirmation.

See the article here:

Informal but Actual Notice of Bankruptcy: What Difference Does It Make? - JD Supra

Revlon Inc. successfully avoided bankruptcy in 2020, but as the company moves into 2021 and the coronavirus pandemic ensues, there are several more hurdles to clear.

Theres more debt to refinance, but theres also the need to accelerate growth across a brand portfolio that was hit hard during the pandemic.

Revlon posted $477 million in net sales for the quarter ended Sept. 30, a 20 percent year-over-year dip. For the nine months ending Sept. 30, net sales declined more than 25 percent, to $1.27 billion.

Elizabeth Arden, which until 2020 had been the bright spot in the business, also saw significant sales declines. For the three months ending Sept. 30, Ardens sales were down almost 14 percent year-over-year, to $106.3 million. For the nine-month period, sales dipped nearly 20 percent, to $282.4 million.

Revlons newly appointed chief marketing officer Martine Williamson said that COVID-19 has accelerated the transformation plan that Revlon had already begun executing in 2020.

Over the course of the year, Revlon made many moves, including restructuring its executive team. Serge Jureidini, the former chief marketing officer, and Silvia Galfo, former global brand president for the Revlon brand, were out. Former Revlon executive Williamson, who also worked at Topix Pharmaceuticals and Glansaol, an early beauty incubator that went bankrupt, was in.

The business also went through furloughs during COVID-19, planned layoffs and several rounds of debt negotiations during the year.

Going forward, Williamson said Revlon plans to double down on key initiatives, which will include growth in Asia, especially China, as well as skin-care and e-commerce sales.

But critics say a modernization effort is needed for Revlons products to succeed with consumers.

The Revlon brand has stayed true to the celebrity spokesmodel formula for years, even as other brands shifted towards promotion via social media influencers and user-generated content, according to Coye Nokes, a partner at OC&C Strategy Consultants. In August, Revlon hired Megan Thee Stallion as a brand ambassador.

It feels like what they are doing is quite an old strategy, Nokes said. Get the celebrity endorsement, put them all over your ads. That worked for a while. Now, a lot of whats appealing to consumers is hearing about it from other consumers.

Williamson said Revlon is pivoting to working more nimbly and effectively across functions, in terms of marketing, and that she plans to use the digital experience she gained at start-ups to inform the digital and e-commerce strategies of the Elizabeth Arden and Revlon brands.

This is already underway as we evolve our marketing function to focus on market-specific needs as part of our continued effort to get closer to our consumers, Williamson said. Ultimately, we want to ensure they are getting the products they need, want and desire and I believe that will strengthen our leadership in the global beauty market.

In order to make progress in 2021, Revlon will not only need to reach consumers, but will also need to safeguard liquidity, according to Debtwire restructuring editor Reshmi Basu.

They were able to stave off a filing [in 2020] thats positive but I wouldnt say they exactly engendered goodwill across the lender and bondholder group, Basu said, referencing debt deals Revlon made that alienated the lending community, including one where the company moved intellectual property out of certain lenders reach.

More refinancing for the business lies ahead. The company has several different maturity dates in July and September, and has said in SEC filings that it anticipates refinancing those loans.

The capital structure is still going to be a front-and-center issue with them. Its not as if all their balance sheet issues have been solved. Theyve gone a long way in working towards it, but a couple of the deals that theyve done theres definitely investor ire in how these deals were done, Basu said.

For more from WWD.com, see:

Revlon Restructures Exec Team Following Debt Deal

Read more:

Revlon Avoided Bankruptcy: What's Next? - WWD

The coronavirus pandemic appeared to be the final straw for a number of retailers that filed for bankruptcy in 2020, a year in which major apparel companies including J.C. Penney Co. Inc., Neiman Marcus Group, J. Crew Group Inc., Brooks Brothers, Tailored Brands Inc. and more filed for Chapter 11.

But the economic downturn sparked by the pandemic is expected to have the slow-burn effect it often does, with more companies headed for financial trouble as the pandemic persists into 2021 and the point of widespread vaccinations still lies months away, experts said.

I think there are a lot of retailers out there who were just on the edge, and trying to make it through, hoping that the holiday season would be successful for them, and successful enough to see a greater future that would allow them to avoid bankruptcy, said Schuyler Carroll, a partner at Loeb & Loeb LLP.

What Im hearing is that there are some of those, and there are some of those that are not going to be able to make it and will be looking to a bankruptcy to try and preserve some future, he added.

I think most of the retailers that have made it this far, theyre hoping to avoid a liquidation, he said. If their holiday season was not good enough, theyll have to resort to liquidation or resort to bankruptcy to bring in new investors, or a sale, or slim down their operations in some way.

Bankruptcy attorneys are also anticipating a ripple effect from retailers financial troubles, expecting that the impact on landlords and suppliers will start to become more apparent in 2021.

More recently, real estate investment trusts including mall operator CBL & Associates Properties Inc. and the Pennsylvanian REIT have filed for bankruptcy protection.

From the landlord perspective, the economics have shifted, said Brad Sandler, who co-chairs the creditors committee practice group at Pachulski Stang Ziehl & Jones. REITs that are less stablethey tend to be [those] that have the B- and C-quality malls and I think that we very well may see some of them restructure, either in or out of court in 2021.

The U.S. courts system issued findings in July that said business bankruptcy filings at that point were about the same as a year ago, at nearly 22,500 filings.

Bankruptcy filings tend to escalate gradually after an economic downturn starts, according to the report. Following the Great Recession, new filings escalated over a two-year period until they peaked in 2010.

But the pandemic has accelerated trends that were already eroding traditional retail. In August, mall traffic at large real estate companies including Simon Property Group Inc., Brookfield Property, Taubman Centers Inc. and others had declined roughly 15 percent from last year, according to a report by S&P Global Market Intelligence analysis based on information from data collection company AirSage.

E-commerce has continued to soar, with online sales over the 2020 holiday season increasing 49 percent from last year, according to data from Mastercards data arm Mastercard SpendingPulse.

An issue tied to all of that is going to be dealing with the supply chain, and drawing customers in and making sure your supply chain doesnt get tied up with disruptions, said Sandler of Pachulski Stang Ziehl & Jones. Its going to be really important for retailers in 2021 to focus on their supply chain management.

Bankruptcy courts, meanwhile, have stayed busy and functional throughout the pandemic, with judges adapting their processes, hosting virtual hearings, conferences and mediations to shepherd cases along, and granting rent deferrals during the bankruptcy where retailers seek it.

Having remote proceedings has allowed stakeholders who previously might not have been able to travel to physical proceedings to now simply appear electronically and be heard in court, said Melanie Cyganowski of Otterbourg PC, a former bankruptcy judge in New York.

I think the bottom line is that the bankruptcy courts are very sensitive, and are able to respond to the nuances of the time period that theyre facing, said Cyganowski. And so, if the bankruptcy laws permit a flexible approach, more likely than not, they will take it.

Another development that has made the bankruptcy court more accessible is the relatively new Subchapter V process, which was created by the Small Business Reorganization Act of 2019 to make the process more affordable for small businesses with smaller debt loads. Furla USA, for instance, is currently in the process of reorganizing through Subchapter V of the Chapter 11 process.

The amount of fees that will be spent in these Chapter 11s is enormous, if youre somebody who has one store, or two stores, you typically really couldnt do it, because it was so expensive, said Paul Aloe, partner at Kudman Trachten Aloe Posner LLP.

I think Subchapter V is going to be very important, he said. You really have an expedited, streamlined procedure.

Ultimately, the fashion industrys recovery and fate will hinge on keeping up with the role of clothing in a pandemic world. The restricted opportunities for dressing up, from corporate offices continuing to allow employees to work remotely to the dwindling number of social events, will have implications for how people think about their wardrobes, said Cyganowski, the former bankruptcy judge.

What are we using clothes for, if people are not going out, if theyre not going out to dinner, if theyre not going on dates, if theyre not going to the theater, if theyre not going to work? she reflected.

Its like, 75 percent of a wardrobe is not being used if people dont get excited about, Oh, Ive got to get a holiday dress, Ive got to get a winter coat, she said.

The pandemic is affecting so much of a part of our lives, that I just think that retail is going to have a very difficult time coming back, Cyganowski said.

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The State of Retail Bankruptcies in 2021 - WWD

ByMaura Webber Sadovi

Chapter 12 family farm bankruptcies fell in 2020 for the first time in six years, in part because federal aid helped offset pandemic supply chain problems that resulted in the forced dumping of milk this spring. But declining farm cash receipts and high debt levels have many worried that Chapter 12 filings will resume their upward tack once government aid programs are rolled back, according to two economists.

Tractor spraying pesticides on soybean field with sprayer at spring

The total number of family farm bankruptcy filings dipped last year to 523, below the nine-year high of 567 in 2019 but still the second-highest annual amount since 2010, federal court filings show. The decline comes even as larger farms became eligible to file for specialized relief after the debt cap was raised in August 2019, the economists said.

A decline in Chapter 12 filings would mark an end to the multi-year rise in farm bankruptcies due to a range of woes, including the trade war with China. But its not yet clear whether the downshift marks a sustainable change in momentum or a temporary pause.

Court closures in the wake of the Covid-19 pandemic have made it more difficult for farmers to file for bankruptcy relief, and a wave of pandemic-related federal aid ranging from specific farm aid to the Paycheck Protection Program has propped up farm finances, according to the economists and a farmer.

I dont think were getting a clear view of bankruptcies this year, said John Newton, chief economist at the American Farm Bureau Federation, one of the countrys largest farm lobbying groups, in an interview withDebtwire ABS in late December. Its going to take some time to really evaluate all the economic impacts.

Commodity prices, land values may not be enough

Early in the year farmers were reeling as shuttered schools and restaurants disrupted their supply chains and slaughterhouse closures due to Covid-19 made it difficult to find places to process cattle, hogs and poultry, he said. By year's end farmers were helped by higher commodity prices, but that wont be enough to keep some out of bankruptcy, according to Joseph Peiffer, an Iowa attorney.

An anticipated 43% rise in net farm income in 2020 to $120 billion was driven in part by $46.5 billion in payments from thefarm billand conservation programs as well as such ad hoc stopgap federal programs as the Coronavirus Food Assistance Program, Newton wrote in a December 3 report. Through the latter, the USDA bought billions of dollars in produce, milk and meat which was then distributed through food banks, churches and non-profits.

Meanwhile, projected farm cash receipts from product sales dipped to $367 billion in 2020 from $370 billion in 2019, according to Newton. This year, if the ad hoc farmer aid is stripped away, net farm income will likely drop to the $90-$100 billion range, proving that farm income in 2020 was a false positive, Newton wrote.

It is also possible that bankruptcies may be stabilizing, but debt levels held by farms are still elevated, said the second economist. That will keep pressure on farmers, and could result in more filings if the emergency aid drops off in 2021, said the second economist.

Another factor is land values, which have allowed many strapped farmers to tap their equity for more debt or sell and get out of farming altogether rather than filing for bankruptcy. Unlike the 1980s farm crisis, the average value of farm real estate per acre has risen annually since 2016, but mostly plateaued in 2020 at $3,160, according to an August USDA report. Values in Kansas, Nebraska and the Dakotas were an exception, falling 2.3% on average, according to the report.

The most powerful kind of bankruptcy

Strong land values are a lifeline for both the distressed farmers who use Chapter 12 to reorganize and stay in businesses and those who end up liquidating in Chapter 12 which lets them avoid paying taxes on their farm sales, the sources said.

For instance, a farmer who sold his Iowa farm out of a Chapter 12 bankruptcy in early December for $3.47 million faces $600,000 in federal taxes on the sale at closing, according to Peiffer. But the farmer will be able to discharge that tax through his bankruptcy case, something that would not have been possible if he had filed a Chapter 7 bankruptcy.Chapter 12 is the most powerful chapter of the bankruptcy code, said Peiffer.

The stew of federal aid and rapidly shifting business patterns leaves many farmers unsure where they stand. Carol Clement, who lost her father to the virus last spring, still isnt clear about the full impact that the pandemic has had on her businesses in 2020 due to myriad changes in expenses, costs and consumer demand.

Clement and her husband, John Harrison, own and operate Heather Ridge Farm in Preston Hollow, New York, where they raise grass-fed beef cows, sheep, goats, pigs, chickens and turkeys. Clement saw a big uptick in sales early in the pandemic as more down-staters moved to the Catskill Mountain area to work remotely in the spring and summer. But now many of those temporary customers have disappeared.

The viruss November surge meant that Clement had fewer customers for her 20-pound turkeys due to downsized family gatherings. She pivoted, quickly deciding to process some of the birds as ground turkey meat and others into turkey legs and breasts. But Clement didnt add the costs of additional required trips to slaughterhouses to her already rich $6.90 per pound turkey prices. And until she finishes calculating her taxes for the year, Clement wont know how all the changes have affected her finances.

With the virus still raging, Clement and other small farmers are all leery of what the next years going to bring," she said.

Maura Webber Sadovi is a Debtwire ABS editor and reporter. She can be reached atMaura.Sadovi@acuris.com.

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Farm Bankruptcies Drop Thanks To Federal Aid, But Falling Cash Receipts And Elevated Debt Portend Trouble Ahead - Forbes