Corporate Bankruptcies Drop 50 Pct Since Pandemic Start

The U.S. saw 10 bankruptcy filings by large corporates with at least $50 million in liabilities in April, but that’s almost 50 percent lower than the same period last year, when there were 19 filings, Bloomberg reported on Tuesday (May 4). Traded distressed bonds and loans, at $82 billion, also hit its lowest level since the COVID-19 pandemic took hold in March 2020. At the peak of the pandemic, the amount of traded distressed bonds and loans neared $1 trillion.

Distressed bonds trading tumbled to roughly $59 billion, an 11.7 percent decline week-on-week as of April 30, Bloomberg data indicates. Distressed loans dropped off to some $23 billion, a 2.3 percent decline.

With debt topping $200 million, alarm system company Secure Home Holdings and its affiliates — including My Alarm Center — was the sole bankruptcy filer in the U.S. last week. It’s planning to turn its business over to creditors, Bloomberg reported.

Ryan Dahl of law firm Ropes & Gray told Bloomberg that bankruptcy restructurings that are more typical have dropped off as businesses continue reopening post-pandemic. Instead, companies are asking for restructuring options that sidestep the courts and can provide additional avenues to boost liquidity.

Friedman Partner Randall Paulikens told Bloomberg that for businesses that hung on throughout the pandemic and are now seeing an uptick in business, bankruptcy filings “may not accomplish much.” Friedman is an accounting and advisory firm specializing in forensic, litigation and valuation services.

Boston-headquartered restaurant chain Cosi is rushing to complete its bankruptcy filing in order to take advantage of President Biden’s $1.9 trillion COVID-19 relief plan for eateries.  The company is hoping its fast-casual restaurant chain will be able to confirm its post-bankruptcy plan by June 30.

Government assistance is being credited in part with staving off corporate bankruptcy filings, which hit a 35-year low last year. Legal services firm Epiq compiled data indicating that 2020 had the lowest bankruptcy numbers since 1989, totaling a cumulative 529,068 across chapters.