Bankruptcies Revisited

In mid-August I predicted that “major” bankruptcies for 2008 would reach 225 (see my post Bankruptcy Update). There had been 120 such bankruptcies at the time. The 120 bankruptcies as of August 15th implied a pace of about 195 bankruptcies, well shy of my prediction. But much has changed since mid-August, so let’s revisit that prediction.

According to Bankrupctydata.com, there have been 172 “major” bankruptcies through October. If we assume that bankruptcies continue to accumulate at 17 per month for the rest of the year (the monthly average), the implied total for 2008 would be 206. However, we know that the bankruptcy pace has quickened since August. In fact, since mid-August, bankruptcies have been averaging about 21 per month. If we use 21 per month instead of 17 per month, the implied total for 2008 would equal 214, …still shy of 225.

That said, I expect the pace to quicken even further. So I stick by my call of 225, which would mean that the pace would have to increase to around 26-27 per month to be consistent with my call. Given the current credit environment, 225 might even turn out to be a bit of an underestimate, …but not by much.

As I mentioned in a previous post, 225 bankruptcies would fall far short of the 289 bankruptcies in 2000 and 383 in 2001 (the dotcom bust). We will not reach 289 bankruptcies this year. However, I would not be surprised to see 2009 challenge the 383 mark from 2001 (or about 32 bankruptcies per month). In fact, if we believe the predictions of my colleague Edward Altman, we should not be surprised to see the number of bankruptcies exceed 32 per month (see NYU’s Altman Sees 2009 Default Rate Doubling). Obviously default is not the same thing as bankruptcy; however, they trend together.

Nevertheless, below you can find an updated list of what I see as the “noteworthy” bankruptcies of 2008 (as reported by Bankrupctydata.com). New additions since mid-August appear in RED (please note that this is not an exhaustive list):

  • AIG (insurance)****
  • Aloha Airlines (airline)
  • American Color Graphics (newspaper)
  • Ascendia Brands (retail)
  • ATA (airline)
  • Bear Stearns (banking)****
  • Bill Heard Enterprises (auto)
  • Bluepoint RE (insurance)
  • Blue Water Holdings (auto)
  • Boscov’s (retail)
  • Brooke Corporation (insurance)
  • Buffets Holdings (restaurants)
  • Ciena Capital (real estate)
  • Comfort Co. (bedding)
  • Dynamic Leisure (travel)
  • Education Resource Institute (insurance)
  • Empire Land (real estate)
  • Eos Airlines (airline)
  • Fashion House Holdings (retail)
  • Fortunoff (retail)
  • Friedman’s Jewelers (retail)
  • Fred Leighton Holdings (retail)
  • Fremont General (banking)
  • Frontier Airlines (airline)
  • Gainey Corporation (trucking)
  • Gemini Air Cargo (air delivery/freight)
  • Goody’s (retail)
  • Greatwide Logistics (trucking)
  • Greektown Holdings (casino)
  • Hospital Partners of America (healthcare)
  • HRP Myrtle Beach Holdings (entertainment)
  • Indymac (banking)
  • Integra Hospital Plano, LLC (healthcare)
  • Integrity Bancshares, Inc. (banking)
  • JHT Holdings (trucking/transportation)
  • Laketown Wharf (real estate)
  • Land Resource, LLC (real estate)
  • Landsource (real estate)
  • Legends Gaming (casino)
  • Lehman Brothers (banking)
  • Lillian Vernon (retail)
  • Linens n’ Things (retail)
  • Luminent Mortgage Capital (banking)
  • Kimball Hill (real estate)
  • Landsource Community Development (real estate)
  • Matrix Development Corporation (real estate)
  • Mervyn’s (retail)
  • Mortgages Ltd. (banking)
  • Motorcoach Industries International (transportation)
  • MPF Corp. (transportation)
  • Mrs. Fields Famous Brands (food services)
  • Pierre Foods (food services)
  • Pope & Talbot, Inc. (pulp/wood products)
  • PRC LLC (business services consulting)
  • Propext (textiles)
  • Quebecor World (USA), Inc. (office services/printing)
  • Red Envelope (retail)
  • Sharper Image (retail)
  • Silverjet Airlines (airline)
  • Sirva (moving services)
  • Skybus (airline)
  • STA Restaurants – Bennigan’s (restaurants)
  • Steakhouse Partners (restaurants)
  • Steve and Barry’s (retail)
  • Syntax-Brillian – Olevia (electronics)
  • Taro Properties (real estate)
  • Tropicana (casinos)
  • Vail Plaza Development (real estate)
  • Value City Department Stores (retail)
  • VeraSun Energy (alternative energy)
  • Vicorp (restaurants)
  • Washington Mutual (banking)
  • WCI (real estate)
  • Whitehall Jewelers (jewelry)
  • Wickes Furniture (retail)
  • Woodside Group (real estate)
  • WorldSpace, Inc. (satellite broadcasting)
  • Ziff Davis (media)

Bankruptcies continue to be concentrated in industries that are close to the struggling consumer. That is no surprise. I expect bankruptcies to become more broad-based as this recession continues to spillover to the broader economy.

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One Response to Bankruptcies Revisited

  1. Adria says:

    Thanks for updating the list. There are some major home builders which are not currently represented on your list, so I thought I’ll point them out.

    One example is PFP/Trend Homes – which went into bankruptcy saddled with debt from banks in a list which looks like the Who’s Who in CRE lending – Franklin, RBC Centura Bank, Wachovia Bank, Charter Bank, Comerica Bank , Amtrust, BOfA, KeyBank, Compass Bank, Zions, Biltmore Bank. Another is Caruso Homes which also has a long list of lenders and a gigantic debt load.

    We’ve compiled a list of home builder bankruptcies:
    http://www.homebuilder-bankruptcy.com/distressed-home-builders-list/

Posted in Bankruptcies, Corporate Strategy, Economy | 1 Comment