U.S. Bankruptcy Tracker: Virus Sparks Worst December Since 2011

This month has seen 16 large companies file for bankruptcy protection in the U.S., the most of any December since 2011, according to Bloomberg data.

The 44 bankruptcies by companies with over $50 million since Oct. 1 make the fourth quarter of 2020 the worst for that period since 2009.

Several of the companies that filed for Chapter 11 protection in December cited the Covid-19 pandemic as a factor in their distress. Two different coal companies, a Brooklyn hotel, a California gym chain and an offshore driller said the virus was at least part of the reason for their filings.

U.S. Bankruptcy Tracker: Virus Sparks Worst December Since 2011

Experts have said the pain will continue next year. Real estate could be a specific area that comes under pressure, said Cynthia Romano, global director of CohnReznick LLP’s restructuring and dispute resolution practice.

‘Next Domino’

“Real estate companies are not going to be able to stomach rent abatement for another 12 months,” she said in an interview. “Real estate will be the next domino to fall unless there’s some kind of relief.”

The past year would have been even worse if lenders hadn’t rushed to the rescue, bailing out companies that were pushed toward restructuring by pandemic shutdowns, said Jon Goulding, a managing director in Alvarez & Marsal Inc.’s restructuring practice.

“The capital markets have been wide open to help folks get to the other side,” he said.

Those huge debt balances could also sandbag President-elect Joe Biden’s plans to rebuild the economy, with the billions of dollars that U.S. companies borrowed to survive the pandemic potentially putting a chill on investment and hiring.

Debt Decrease

There have been 243 bankruptcy filings year-to-date by companies with more than $50 million in liabilities, according to data compiled by Bloomberg. That’s the most since 2009, when there were 290 in the comparable period.

Read more: The Covid Bankruptcies: Guitar Center to Helicopter Charters

The total amount of traded distressed bonds and loans shrank by 3.4% to about $168 billion as of Dec. 18. Troubled bonds and loans declined 3.1% and 4.1%, respectively, in that period. ​

There were 377 distressed bonds from 199 issuers trading as of Monday, down from 412 and 204, respectively, the previous week. That’s significantly less than the 1,896 deals from 892 companies at the March 23 peak.

U.S. Bankruptcy Tracker: Virus Sparks Worst December Since 2011

Transocean Ltd. had the most distressed debt of issuers that hadn’t filed for bankruptcy as of Dec. 18, Bloomberg data show.

Top 5 Distressed IssuersDebt ($B)
Transocean Inc4.6
AMC Entertainment Holdings Inc4.5
Ligado Networks LLC3.9
Crown Finance US Inc3.3
American Airlines Inc2.4

Several distressed companies have significant dates approaching. GTT’s extended forbearance nears its end, while Iconix, AMC and Sequential Brands have payments in the coming weeks.

Read more: AMERICAS DISTRESSED WATCH: GTT, Iconix, AMC, Sequential Brands

©2020 Bloomberg L.P.

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