- March & April saw a tremendous uptick in corporate bankruptcies.
- Energy Future Holdings (EFH) is the 8th largest bankruptcy of all time.
- EFH has 60+ different debt issues spread out over its complicated capital structure.
After a number of slow months in the bankruptcy world, we've seen a flurry of new activity over the last two months. During the months of March and April alone, we saw 11 public companies with assets in excess of $300 million file for Chapter 11 protection, as detailed below:
Public Chapter 11 Bankruptcies Initiated
in March & April 2014:
|Company Name||Description||Pre-Petition Assets*|
|Energy Future Holdings Corp.||Energy||$40,970|
|Genco Shipping & Trading Ltd.||Ocean Trans.||$2,957|
|Momentive Perf. Materials, Inc.||Silicone||$2,694|
|James River Coal Company||Coal||$1,204|
|Sorenson Communications, Inc.||Telecom||$645|
|MModal Holdings, Inc.||Health Data||$627|
|Global Geophysical Services, Inc.||Seismic Data||$553|
|Dolan Company, The||Prof Svcs.||$450|
|Coldwater Creek, Inc.||Retailer||$346|
* Assets in $mil
The month ended with a bang, with the long-anticipated Energy Future Holdings filing, which is the largest of 2014 (thus far) by a tremendous margin. With $41 billion in total assets, this pre-arranged Chapter 11 bankruptcy also ranks among the top-10 historic bankruptcies (see chart below). The last company to make it on this list of mega-Chapter 11 petitioners was MF Global Holdings back in 2011.
20-Largest Public Chapter 11 Bankruptcies of All Time
|Company||Bankruptcy Date||Pre-Petition Assets*|
|Lehman Brothers Holdings Inc.||09/15/08||$691,063|
|Washington Mutual, Inc.||09/26/08||$327,913|
|General Motors Corporation||06/01/09||$91,047|
|CIT Group Inc.||11/01/09||$80,449|
|Energy Future Holdings Corp.||04/29/14||$40,970|
|MF Global Holdings Ltd.||10/31/11||$40,542|
|Thornburg Mortgage, Inc.||05/01/09||$36,521|
|Pacific Gas and Electric Co.||04/06/01||$36,152|
|Financial Corp. of America||09/09/88||$33,864|
|IndyMac Bancorp, Inc.||07/31/08||$32,735|
|Global Crossing, Ltd.||01/28/02||$30,185|
|Bank of New England Corp.||01/07/91||$29,773|
|General Growth Propert., Inc.||04/16/09||$29,557|
|Lyondell Chemical Company||01/06/09||$27,392|
* Assets in $mil
As a result of this recent uptick, we've gone from one of the slowest periods for major bankruptcy filings in recent memory to one of the most active. This raises the question: Is this the beginning of a significant new bankruptcy wave, or is just a coincidence that all these companies filed in the same two-month period?
We've seen a few short periods in the past when there has been a burst of Chapter 11 filings but no sustained trend followed. On the other hand, as we've been saying for some time, a large number of highly leveraged companies will have to restructure their balance sheets in the not-too-distant future, and so this could be the beginning of a trend.
At any rate, distressed securities investors suddenly have a nice batch of new opportunities to consider. Energy Future Holdings alone has something like 66 different debt issues spread out over its complicated capital structure. That company alone will keep distressed securities investors--not to mention lawyers and other bankruptcy professionals--busy for some time to come.