Free Republic

The Federal Reserve warned of significant risks of business bankruptcies and steep drops in commercial real estate prices in a report published on Friday. “Business leverage now stands near historical highs,” the central bank said in its semiannual Monetary Policy Report to Congress. “Insolvency risks at small and medium-sized firms, as well as at some large firms, remain considerable.” In part encouraged by government and Fed programs, businesses have taken on more debt over the past year as they’ve struggled to deal with the economic and financial fallout from COVID-19, including in some cases forced shutdowns. The Fed report, which...

If government were run on the business principles of profit and loss, the decision on a bailout for the Big Three automakers would be obvious: Absolutely not. Companies that make poor investments and unpopular products end up in bankruptcy court —- without salvation from the taxpayers. But the decisions of government are not simple balance-sheet calculations. Political leaders must take into account additional considerations, including this one: What’s in the best interest of the country? Aiding Detroit, as Congress is now considering with $15 billion in bridge loans, is the right move because failure to do so poses even graver...

Calpine Corp., the power plant owner saddled with more than $17 billion in debt, filed for bankruptcy protection Tuesday after soaring natural gas prices left it unable to make loan and bond payments. The filing in U.S. Bankruptcy Court in New York followed the ouster of top executives after they lost a fight with bondholders over using asset sale proceeds for plant fuel. "I would expect bondholders to receive about par following an abbreviated bankruptcy," Jon Kyle Cartwright, director of research for BOSC in Clearwater, Fla., said in an interview Tuesday before the filing. "I would expect them to be...

Ford Motor Co. took the first step in its next restructuring by confirming it plans to trim up to 4000 white-collar jobs in North America by the end of March. Mark Fields, Ford president of the Americas, disclosed the plan in an e-mail distributed to Ford employees. The cuts will include full-time and contract positions. Some of the cuts will come through attrition but others will require layoffs, according to Fields, who is expected to lay out the full scope of the company's restructuring plan in January. The plan is expected to include the closure of assembly plants and the...

SAN FRANCISCO -- State regulators unveiled a reorganization plan for Pacific Gas & Electric Co. on Monday that calls for customers to pay $4.7 billion--or $1.4 billion more than the stockholders would--to restore the company to financial health. But the California Public Utilities Commission contends that its plan filed in federal Bankruptcy Court avoids $13.5 billion in higher energy and other costs associated with PG&E's own plan. PG&E issued a statement saying that the PUC plan is unworkable and tries to illegally suspend stockholder profits for more than two years, harming company retirees. PUC officials said they hope their plan...

<p>But for PG&E Corp., the bankruptcy of its huge utility subsidiary has hardly been an occasion for reaching for the Novocain.</p> <p>PG&E's elixir has been the utility's status as a "solvent debtor" and its promise to fully repay all its creditors -- assurances that PG&E lawyers recite like a mantra in court arguments and legal briefs.</p>