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Bankruptcy For Debt Collection; Tariffs Squeeze Entrepreneurs; Sunnova Extends Forbearance
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Good day and welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Monday, May 12. In today's briefing, several Covid testing labs have filed or are planning to file for bankruptcy as a strategy to collect unpaid claims—an unusual use of the court system that's riaisng eyebrows. Meanwile, small U.S. business hit by 145% tariffs on Chinese imports are cutting costs, seeking investors and, in some cases, preparing to shut down. And Sunnova Energy has once again extended its forbearance agreement.
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During parts of the pandemic ProPhase processed thousands of Covid tests a day, according to its CEO. Photo: brendan mcdermid/Reuters
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Covid Test Lab Weighs Unusual Debt-Collection Plan: Bankruptcy
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Few companies are eager for a bankruptcy filing, but ProPhase Labs might be an exception.
To collect accounts receivables from its days processing Covid-19 tests done inside pop-up tents in New York City years ago, the publicly traded company has said it plans to put a basically dormant testing subsidiary into bankruptcy, where a collections firm can then sue insurers “incredibly efficiently, all through one court with one judge.”
“A significant percentage of those tents were sending their specimens to our lab,” starting with roughly 100 tests a week and building to thousands a day, ProPhase Labs Chief Executive Ted Karkus recalled to analysts last month.
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Joe Bissonette, who makes tents in Colorado from imported fabric, has cut production in half and laid off one of his five employees. Photo: Sky View Tents
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How Tariffs Are Crushing Small Businesses: ‘Nobody in Power Seems to Care’
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The owner of a San Francisco card-game company cashed in his money-market funds. The founder of a tent maker is looking for investors. A watch and jewelry company in Colorado is holding off on signing a new office lease. And a New Hampshire consumer-product company has laid off more than half its staff.
Around the country, small businesses that import goods made in China are taking actions—big and small—to try to outlast the current 145% tariff regime on items from that country. But many are worried that their companies won’t survive.
“Nobody in power seems to care about small business,” said Scott Anderson, owner of 5 Star North, which works with Chinese manufacturers to make its products ranging from acrylic markers to tiki torches. “At this point the only option I see is selling out the rest of what we have and shutting our doors.”
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Sunnova Extends Forbearance to May 15
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Sunnova Energy International’s forbearance agreement has been extended to May 15 unless another event of termination occurs before that.
Earlier last month, the Houston-based company entered into a 30-day grace period after electing to skip a bond interest payment on $400 million in senior notes maturing in 2028.
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AMC Networks recorded a smaller profit in the first quarter on a lower base of revenue. Photo: Andrew Harrer/Bloomberg News
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AMC Networks Profit Shrinks as Linear TV Fades
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AMC Networks recorded a smaller profit in the first quarter on a lower base of revenue as steady declines in the linear-TV model continue to overwhelm gains in streaming.
The operator of cable channels and streaming networks posted a profit of $18 million, or 34 cents a share, compared with $45.8 million, or $1.03 a share, in the same quarter a year earlier. Stripping out one-time items, adjusted earnings were 52 cents a share. Analysts surveyed by FactSet had been expecting 78 cents a share.
Subscription revenue slid 3% in the U.S. due to declines in linear TV subscriptions, though streaming revenue was up 8% thanks to price increases across its services. Subscription revenue outside of the U.S. was down 12%.
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Big Lots counts among the big-box stores that filed for bankruptcy. Photo: Eric Thayer/Bloomberg News
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Rest of Year Isn’t Looking Good for Retail-Property Market
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Shopping-center owner Sandy Sigal groaned when he found out that the bankrupt home-goods retailer Big Lots was closing its location at his Whittier, Calif., strip center.
He knew it wouldn’t be easy to replace Big Lots, which had attracted shoppers from the surrounding neighborhoods to the property.
“In today’s slowdown, as good of a location as this is, it’s taking longer,” said Sigal, who is chief executive of shopping-center owner and developer NewMark Merrill Companies. “People are saying, ‘I’m on pause.’”
The retail-property market’s multiyear rebound is fizzling, buffeted by large retailer bankruptcies, shoppers pulling back and tariff turmoil that is slowing demand for store space.
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