The Wall Street Journal reports that high demand for corporate debt has allowed even the riskiest of companies to refinance their debt at interest rates that have typically been reserved for only the safest types of debt. Since the beginning of the year through February 10, over $13 billion of new debt has been issued, ranked CCC or lower, which is twice the previous record pace. [WSJ; February 15, 2021]
The New York Times reports that London landlords with commercial real estate properties are being increasingly pressured to loosen lease terms. In the last year, retail and hospitality tenants commenced company voluntary arrangements, a form of out-of-court restructuring available in the United Kingdom, to reduce rents or allow rent to vary based on revenue. The government is also considering lease reforms such as abolishing lease terms that require rents to increase following regular review periods. [NYT; February 9, 2021]
Sustained declines in oil prices and demand have pushed Seadrill Ltd., an offshore oil-rig operator, into its second Chapter 11 bankruptcy in four years, as reported by the Wall Street Journal. The company has plenty of cash on hand ($650 million) but no deals with its lenders that hold more than $7 billion in debt. [WSJ; February 11, 2021]
Student loan forgiveness remains a focus of political discussion, and in this recent article, Forbes discusses forgiveness options for both federal and private student loan debt. One potential option is changes to the federal bankruptcy laws that would make it easier for borrowers to discharge student loan debt in bankruptcy. [Forbes; February 5, 2021]
Originally Published by Mayer Brown, February 2021
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