CNBC reports that slow rollout of the vaccines and more contagious strains of Covid-19 may threaten investor outlook that have been buoyed by optimism about a swift economic recovery. A possible K-shaped recovery may see companies of certain type and size start to recover while leaving out low-income families, and companies in the airline, restaurant, movie and hotel industries all of which were drastically impacted by the pandemic. [CNBC; Jan. 21, 2021]
Data compiled by S&P Global Market Intelligence shows a surge of corporate bankruptcies between Jan. 1 and Jan. 19, exceeding the number of bankruptcy filings during any comparable period since 2012. Companies in the consumer discretionary sector continue to suffer distress, accounting for 8 of the 33 filings made during the period. [S&P; Jan. 21, 2021]
Fitch Ratings notes that the Brazilian President's veto of a provision in Brazil's new bankruptcy law, which provision allowed asset sales in in-court restructurings to be free and clear of contingent liabilities, could lead to lower recovery prospects. Excluding such a provision could negatively affect asset values and discourage buyers from bidding. The Brazilian Congress may decide to override the veto, with a decision expected by early March 2021. [Fitch; Jan. 20, 2021]
The Houston Chronicle reports that over 100 oil and gas companies declared bankruptcy in 2020 after the coronavirus pandemic caused global demand for crude and petroleum products to crash. The downturn comes on top of increased investor/lender pressure the oil and gas industry has already been facing. [Houston Chronicle; Jan. 20, 2021]
Originally Published by Mayer Brown, January 2021
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