In January I predicted that “major” bankruptcies in 2010 would number around 300 (see Notable Bankruptcies of 2010: Q1). According to Bankruptcydata.com, there were 59 “major” filings in the first half of 2010. Assuming that bankruptcies are equally distributed throughout the year, this puts us on pace for around 120 bankruptcies. Again, this would be well shy of my prediction.
In previous posts I discussed why I believed “major” business bankruptcies were tracking below expectations (see Notable Bankruptcies of 2010: Q1 and Notable Bankruptcies of 2009). The candidate explanations include: an improving economy; massive government stimulus/liquidity programs keeping structurally weaker firms on artificial life support; and the recovery disconnect between Main St. and Wall St. (i.e., small-firm bankruptcies are on the rise even while major bankruptcies have declined).
Personally, I continue to believe that the significant dip in “major” business bankruptcies that we have witnessed over the past year has a lot to do with the extraordinary government stimulus and liquidity programs. Nowhere has this been more evident than in the disconnect between the bankruptcy patterns across small and large corporations (see Notable Bankruptcies of 2010: Q1 for details). And as I’ve maintained all along, absent a second round of stimulus, we will find out if my hypothesis is correct as the stimulus and liquidity programs begin to wind down. In this sense then, the true test for corporate balance sheets (and by extension, the economy) will come in the second half of the year.
Given the recent troubles in Europe and the softer economic employment and growth numbers at home, it continues to be my expectation that the pace of corporate bankruptcy filings will increase in the second half of 2010. Will we ultimately reach 300 “major” business bankruptcies? At this point, likely not. But I do not think 200 is out of the question.
If fundamentally weak companies are being propped up by an artificially-stimulated economy that cannot structurally support them, it is only a matter of time before bankruptcies begin to reflect true underlying economic fundamentals.
Anyhow, below you can find an updated list of what I see as the “noteworthy” bankruptcies of 2010, as reported by Bankrupctydata.com. New additions since March appear in RED (please note that this is not an exhaustive list):
- Affiliated Media, Inc. (Newspapers)
- American Mortgage Acceptance Company (Real Estate)
- Anthracite Capital, Inc. (Real Estate)
- Atrium Companies, Inc. (Windows and Doors)
- Beach First National Bancshares, Inc. (Banking)
- Black Gaming, LLC (Gambling)
- Chem Rx Corporation (Pharma Services)
- Community Bancorp (Banking)
- Corus Bankshares, Inc. (Banking)
- Electrical Components International, Inc. (Manufacturing)
- EnviroSolutions Holdings, Inc. (Waste Disposal)
- Evergreen Bancorp, Inc. (Banking)
- FirstFed Financial Corp. (Banking)
- Haights Cross Communications, Inc. (Publishing)
- International Aluminum Corporation (Real Estate)
- Mesa Air Group, Inc. (Airlines)
- Morris Publishing Group, LLC (Media)
- Movie Gallery, Inc. (Retail)
- Neenah Enterprises, Inc. (Manufacturing)
- Neff Corp. (Construction)
- Orleans Homebuilders, Inc. (Real Estate)
- Penton Business Media Holdings, Inc. (Media)
- Point Blank Solutions, Inc. (Security)
- Regent Communications, Inc. (Media)
- R&G Financial Corp. (Banking)
- Saint Vincent’s Catholic Medical Centers (Healthcare)
- Spheris Inc. (IT Services)
- TierOne Corporation (Banking)
- The Newark Group, Inc. (Paper)
- Uno Restaurant Holdings Corporation (Restaurants)
- US Concrete, Inc. (Construction/Basic Materials)
- Xerium Technologies, Inc. (Paper)