Law and legal issues

Bankruptcy filings are surging due to the economic fallout of Covid-19, and many lenders are coming to the realization that their claims are almost completely worthless. Instead of recouping, say, 40 cents for every dollar owed, as has been the norm for years, unsecured creditors now face the unenviable prospect of walking away with just pennies - if that.

The agency’s consolidation of supervision and enforcement policy into one office could compromise the independence of those deciding when to investigate alleged wrongdoing by banks and others, critics of the move say.

As the pace of large U.S. company bankruptcies stabilizes, escalating tensions between distressed companies, private equity owners and creditors signal more bruising Chapter 11 filings to come.

Deals, trends and research in structured finance and asset-backed securities for the week of Sept. 18-24

The rental-car company is mulling two tentative offers for loans of about $1 billion to $1.5 billion. The proposals came from a group of Hertz’s unsecured creditors and a separate set of first-lien creditors.

After a boom in corporate distress when economies shut down to deal with the pandemic, 2020 had been expected to be the biggest bankruptcy year ever. The pace of bankruptcies was widely expected to pick up after last month, which was slower than May-July, but still the worst August on record.

This year has already seen a glut of corporate failures: there were 177 U.S. bankruptcy filings year-to-date by companies with over $50 million in liabilities, according to data compiled by Bloomberg

Citigroup’s $900 million payment blunder in a normally low-profile part of the financial market dominated by a handful of banks has experts wondering if regulators will uncover a deeper problem.

The bank — which said it has been upgrading its loan operations platform after a review it undertook last year — said it mistakenly transmitted the payments after an employee didn't manually select the correct system options in its loan operation software.

Citigroup scored court orders freezing almost half of the more than $900 million it says was accidentally sent to Revlon lenders this month.