Bankruptcies of Public Companies and Large Private companies with Funded Debt at highest level since the Global Financial Crisis.
BOSTON, Oct. 5, 2023 /PRNewswire-PRWeb/ -- According to Data compiled by New Generation Research's BankruptcyData, Bankruptcy Filings as of the end of the Quarter ended September 31, 2023, totaled 7518 year to date. This is the highest rate of bankruptcy since 2020, up sharply from last year. The total number of filings YTD in 2023 exceeds all filings for both 2021 and 2022, and is on a pace which rivals the activity of 2020, itself was a record year unequaled since the days of the Global Financial Crisis.
Even more telling, the pace of Public and Large Private company filings has accelerated sharply in 2023 versus prior years (see blue line in the chart below. So far in 2023, there have been such filings versus 383 for all of 2022, an increase of over 70%, and there are still three months to go in 2023. Also, the number of companies doing a round trip to Bankruptcy court among public and large private companies has risen markedly in 2023. Where last year there were 20 Chapter 22 cases all year, so far in 2023 there have been 21 repeat filers (2 of which are Chapter 33s).
The pace of filings has been trending upwards during the course of the year as the graph below indicates. Filings per month peaked in May but have remained substantially higher than early in the year. The tenacity of higher interest rates and inflation seem to be driving this increase.
FTLINGS BY STATE
Looking at jurisdictions by state and bearing in mind that 2023 numbers are YTD and compared in the table at right to full year 2022 numbers, California leads as the state with the greatest number of filings, followed by New York and Texas. Texas and New York flipped their roles relative to the previous year.
Every state is ahead of last year's total number of business filings for the full year, and this pattern extends to all 50 states.
It is likely to be a banner year for bankruptcy professionals. Of note is the increase in non-US jurisdictions, reflective of a larger volume of Chapter 15 activity so far this year.
TOP INDUSTRIES EXPERIENCEING BANKRUPTCY FILINGS
The top 3 industries for Bankruptcy YTD in terms of filings are in the Real Estate sector at 16.1%, Healthcare and Medical at 11.6% and Construction and Supplies. This trio typically tops the list, though the Healthcare industry share has increased in 2023 relative to 2022. The top real estate filings so far in 2023 have both been Chinese origin Chapter 15s, which by assets, represent the 2 largest filings of the year so far.
DISTRESSED SITUATIONS ARE ALSO ON THE RISE
BankruptcyData maintains a watchlist of companies exhibiting signs of distress. As with business bankruptcy filings, we have seen a clear increase in the volume of companies triggering our screens. The number of distressed situations we are monitoring is up 34% this year (2023 YTD) over the full year 2022.
PROFESSIONAL RETENTIONS
BankruptcyData publishes a quarterly update on professional engagements and these following numbers refer only to debtor side engagements. This last quarter the Top three Law Firms by retention have been Pachulski, McDermott Will & Emery, And Morris James. This includes local counsel engagements.
Pachulski leads the Year-to-Date leaderboard as well, followed by Young Conaway and Jackson Walker. Notable engagements for Pachulski include Yellow Corporation, Amyris, Inc., PGX Holdings, and Monitronics International.
Young Conaway's notable cases include Capstone Energy, Amyris (as local bankruptcy counsel) and Desolation Holdings (Bittrex) in the crypto sector. Meanwhile Jackson Walker's largest engagements included Diebold Holdings, Genesis Care, Envision Healthcare, National CineMedia, and Diamond Sports Groups.
The most engaged Financial Advisors to date have been FTI, Dundon and Alvarez and Marsal. FTI scored with Smile Direct, Yellow Corporation, Western Global Airlines among others. Dundon engagements were on the smaller end of the spectrum, with Lannett Company being the largest case by Liabilities. Alvarez and Marsal reaped fewer cases, but notable larger filings included Vice Media, Envision Healthcare, Wesco Aircraft Holdings and PGX holdings. Had the rankings been tabulated by Liabilities, A&M would have topped the advisor league tables.
The top 3 investment banks YTD were Jefferies LLC with 9 engagements, Moelis & Company and Houlihan Lokey Inc. tied for second with 8 each, and Guggenheim Securities, LLC with 7.
Jefferies top engagements included Qualtek Services, Benefytt Technologies and Amyris, Inc. The Moelis engagements may have been just shy of Jefferies, but arguably included larger filings, including Venator Materials, Diamond Sports Group and Party City Holdco, Inc. Houlihan Lokey meanwhile tallied Sunac China Holdings, Yellow Corporation, Diebold Holding Company and Genesis Care Pty Ltd.
Top cases for Guggenheim included Mallinckrodt' Chapter 22, Kidde-Fenwal Inc., and the high-profile Bed Bath and Beyond case.
Interestingly, the largest case of the year so far, China Evergrande Group, employed as of this writing no Investment Bank. The highest approved fee applications this year for Investment Banks went to Evercore Partners, who billed $26.75 million in court approved fees for their work in 2022's Talen Energy Case.
Full league tables and fee application data are available on BankruptcyData.com.
Of the environment this year, BankruptcyData's Head of Research, Nick Montgomery noted, "There has been a relative dearth of blockbuster filings, with most activity in the middle market. One interesting trend is an anecdotal increase in dismissal/conversion motions or orders filed over the last two weeks. There have been seven, five of which relate to post-asset sale debtors. The other two are illustrative of a hard pragmatism we are seeing....where financing dries up, and patience quickly runs out. As to the asset sales, I think a legitimate 20,000ft assessment is that sale proceeds are not hitting expectations, leaving top-level secured creditors impaired and the game pretty evidently over as to everyone else." ‥
Media Contact
James Hammond, New Generation Research, Inc, 1 6175739550, [email protected], www.bankruptcydata.com
SOURCE New Generation Research, Inc
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