Scorning warming does not prevent it
Former CEO Rex Tillerson told shareholders in 2015 that Exxon Mobil would not invest in renewable energy because “we choose not to lose money on purpose.”
He cast doubt on whether recent extreme weather events were the result of climate change — they were — and rejected a proposal to place a climate expert on the board of directors. “It would not be in the best interests of the company or its shareholders,” he wrote.
At the time, I replied: “The top European oil companies unveiled their strategy for addressing climate change. … But unfortunately, the Americans are too tied to right-wing politics to take a leadership role.
“Memo to Tillerson: The next time you complain about why the public hates the oil and gas industry so much, look in the mirror. Calling your European colleagues insincere and people who understand climate science stupid is not the way to make friends and influence people.”
The Texas Blackout has revived the climate change deniers and energized fossil fuel advocates because they see a chance to roll back the tide of renewable energy. They spread misleading statistics and outright lies to put more money in their pockets at our expense.
But no attempt to cover up fossil fuel’s fatal failure will stop climate change or the energy transition. Keep in mind, if Tillerson had ignored the climate deniers in 2015, his company would be in a much better place right now.
Royal Dutch Shell, one of Exxon’s few peer competitors, recently announced it was ramping down crude oil production. Longtime CEO Ben van Beurden said the corporation would invest $6 billion a year in renewable energy projects
Biden, businesses in certain industries have become particularly vulnerable and may take years to recover enough to pay their bills. Others will not recover at all.
Other sectors have so far not fared as badly as one might expect, as only 77 hotel or gaming companies filed for protection in 2020, down from 92 in 2019 — a year when the tourism industry thrived.
Because bankruptcy filings lag other signals of economic distress, experts say the worst may be yet to come. Bankruptcies stemming from the 2007 financial crisis didn’t peak until 2010.
“Bankruptcies don’t cause damage to the economy,” said Ed Flynn, a consultant to the American Bankruptcy Institute. “The damage has already been occurred when the bankruptcy is filed. Higher bankruptcies is more a symptom of economic harm than the cause.”
Michigan-based Barfly Ventures operated three small restaurant chains — Hopcat, Stella’s Lounge and Grand Rapids Brewing — and had more than a dozen restaurants throughout Michigan and down to Florida at its peak. Although Barfly received $6.6 million in Paycheck Protection Program funds from the Small Business Administration, the company was forced to lay off staff and close some locations permanently, according to filings. It filed for bankruptcy in June.
“Barfly has faced a number of challenges in recent years, including increased industry competition and craft beer saturation,” founder Mark Sellers announced. “However, we were meeting these challenges, and operationally the business was sound until the recent global pandemic pushed us into an unforeseen economic crisis and a 100 percent drop in revenue for almost three months.”
Barfly owed more than $1.7 million to a food provider, according to its bankruptcy filing. Sellers said he hoped the move would “allow us to emerge as a financially stronger company.” In October, Barfly announced it was being purchased by two investment firms.
Restaurants have been one of the hardest-hit sectors on almost every measure during the pandemic, and experts say the worst of the fallout is likely still to come.
“Restaurants I know are having a hard time. And it’s just a question of when they are going to file,” Los Angeles bankruptcy attorney Rosendo Gonzalez said.
Gonzalez, who serves as a court-appointed bankruptcy trustee in some cases and represents other companies for their own filings, said restaurant clients he has talked to are either closed or hanging on by a thread. Some will just walk away from their locations and not bother filing, he said. Others may wind up filing for Chapter 7, meaning all of their assets are liquidated and they do not reopen.
“I think there is going to be an increase across the board, of all types and chapters. I just don’t know when it’s going to happen,” he said.
Real estate start-up Knotel, which helps companies book flexible office space, raised hundreds of millions of dollars and competed with Wework following its 2016 founding by entrepreneur Amol Sarva.
But as working from home became the norm during the pandemic, the need for office space dissipated, and the company filed for bankruptcy last month. “The pandemic created a uniquely challenging operating environment,” Sarva said. Knotel is being acquired by the real estate services firm Newmark Group.
As the value of retail and office space has plummeted during the pandemic, it has plunged development projects underwater, meaning the values of the properties are lower than the amount the owners owe. Jim Hammond, chief executive of New Generation Research, said real estate companies with heavy debts will be at risk.
“Even a return to normal may not be enough to save them,” Hammond said.
Despite the increase in business Chapter 11 filings, there is good news. Because this category of bankruptcy provides filers with protection from creditors for a limited time, it allows them to reorganize and sometimes remain in business. Some, including a day-care center in suburban Boston and a specialized manufacturer outside Detroit, are being purchased or transferred to new management, according to court filings.
Companies with many subsidiaries are among the filers, which may make some industries appear to be worse off than they are.