Buyer Beware: 30 Biggest Bankruptcy Risks

The following companies are listed in order, based upon the credit-default swap spreads on five-year corporate bonds as of early April. The list is compiled from research provided publicly through MSN Money.

AbitibiBowater (declared bankruptcy on Friday) (ABH)
R. H Donnelly (RHDC.PK)
Visteon (VC)
General Motors (GM)
Six Flags (SIX)
Financial Guaranty Insurance
Hawker Beechcraft
Ineos Group
NXP Semiconductors
McClatchy (MNI)
Unisys (UIS)
CC Media
Beazer Homes USA (BZH)
YRC Worldwide (YRCW)
Hellas Telecommunications II
Lear (LEA)
Ono Finance
American Axle and Manufacturing (AXL)
Harrah's Entertainment
Truvo Subsidiary
Ford Motor (F)
Rite Aid (RAD)
MBIA (MBI)
Freescale Semiconductor
Univision Communications
ArvinMeritor (ARM)
Pioneer Electronics
Travelport

A very interesting, prioritized list of companies that may not be on any list one year hence.

Comments

[notsosmart]

thanx

2009 Apr 19 10:04 AM

[ArkansasAngie]

How many of these will be getting bailout funds?

The government is picking winners and losers not the market.

It is the number of potential bankruptcies that bothers me when I search for a recovery.

How many companies, without a bailout, can survive without a return to growth matching the models they used to justify taking on the debt in the first place?

2009 Apr 19 10:05 AM

[drbob66]

Interesting... glad I don't own any of these.
Thanks for the post.

2009 Apr 19 10:36 AM

[John D]

More info we don't really need - like the movie said "If you have nothing nice to say ...don't say anything at all" - how about going back to the drawing board and find something POSITIVE + for the readers, I'm pretty sure that everyone has had enough of the bad news !!

2009 Apr 19 11:14 AM

[TxPublisher]

How can you trust this guy, he can't even count. The headline says 30 companies, but only 28 are listed! Does seeking Alpha have an editor who checks this stuff before it is published. Can we trust any of their numbers, anywhere?

2009 Apr 19 12:23 PM

[PROXIMO]

Thanks for an informative article dealing with reality. While some SA readers obviously prefer to remain in denial, I am not a member of that club. Your post is appreciated by many.

2009 Apr 19 12:25 PM

[Bagsnatcher]

Travelport? Ouch... that's where I work FFS..
Thank you for the info. I will check this with my colleagues first thing tomorrow morning

2009 Apr 19 01:39 PM

[The Raven]

Actually, I prefer to think of it in a positive way as news you can use. Why be so negative?


On Apr 19 11:14 AM John D wrote:

> More info we don't really need - like the movie said "If you have
> nothing nice to say ...don't say anything at all" - how about going
> back to the drawing board and find something POSITIVE + for the readers,
> I'm pretty sure that everyone has had enough of the bad news !!

2009 Apr 19 03:08 PM

[H in Roch]

I don't agree with the premise the CDS (credit default swaps) spreads are a good indicator of bankruptcy likelihood.

The problem is that many of these companies have been abused by games from short sellers to ruin their CDS ratings to force their stock prices down. In some cases, this is justified, but in nearly all cases, foul play is afoot.

Unfortunately, the foul play may in fact bring down (some of) the companies even though it was unjustified.

In some of the cases, the companies have enough cash to make it for years and may do just fine if the economy recovers in relatively short order. Most of the companies that did not plan ahead have already gone under... With the exception of the large financial cos which received bailouts.

2009 Apr 19 03:53 PM

[dlmc42]

Interesting/informative - considered going long AXL (again) after Friday's pullback - reconsidering now. Only interest in this stock is that I went to school with Dick Dauch, co-founder and CEO, and have followed his career with interest. As a retired auto industry veteran it is very sad to see the US automakers and parts suppliers "on the ropes"!

2009 Apr 19 05:11 PM

[303820]

Another brainless expert shooting his brain off and saying nothing...negative news is not what this country needs!

2009 Apr 19 08:35 PM

[Brian in Wilmington]

"Another brainless expert shooting his brain off and saying nothing...negative news is not what this country needs! "

I'll bet 303820 watches a lot of Fox News Channel...

If you want nothing but good news why would you read this site? I like the (often excessive) contrarian articles here, as you rarely get if from the mainsteam news... but this isn't even that. It is a list of the biggest risks based on market based estimates of their risk...

It is good information whether you think they will go bankrupt or not.

2009 Apr 19 11:11 PM

[TAS]

I had 30 companies, but two additional companies that were in the "30" went under between April 10-14th. The author apologizes for not mentioning this discrepency.

2009 Apr 20 01:20 AM

[Daniel Andres Jacome]

Simialr list was made by Moodys recently - listed RAD, which crushed MCK (15% of sales)

2009 Apr 20 08:51 AM

[Matt Miller]

I don't think based on my knowledge of the markets and industry, that Ford should be on this list. In fact, they are poised to outperform all in the auto sector.

2009 Apr 20 10:57 AM

[Matt Miller]

PS... I think the author did a good job here and should be commended for his DD. Thanks Tom!

2009 Apr 20 11:16 AM

[Wadhamite]

Humbling news, but appreciated and more accurate than we want to admit.

2009 Apr 20 11:35 AM

[jstratt]

Excellent post! I appreciate this information.

2009 Apr 20 12:48 PM

[Michael Terry]

Yeah, dont need negative news - cant have a good suckers rally with it. Focusing on the positives in investing is a great strategy. The weather is warm in florida, maybe you should get long real-estate. As well, CDS does not have ratings - the senior debt it references has ratings. And CDS cannot help your firm fail unless it needs financing and finds the cost is too great or it leads to a run (in the case of financials). CDS should be one tool in the investors toolbox, and as a result bears watching.

2009 Apr 20 01:38 PM

[DonFurio]

Ford already converted a good chunk of their debt into equity. If the economy picks up at all next year, I think they'll be ok. Not enough is written about Alan M. coming to ford as an outsider and preparing Ford for the downturn.

2009 Apr 20 02:21 PM