Q3 League Tables: Bankruptcy Filings Remain Elevated
The pace of bankruptcy filings remained elevated in the third quarter, if slightly down from the peak they reached during Q2, with new industries joining others that were in financial straits before the Covid-19 pandemic.
At least 121 companies filed for bankruptcy in the third quarter, according to The Deal’s database, compared to 191 during the second quarter. Epiq Systems Inc. shows 1,170 Chapter 11 filings in July and August, compared to 873 during July and August of 2019.
As has been a trend since long before the pandemic, retail and energy companies again topped the list of filers with Ascena Retail Group coming in with the largest Chapter 11 case this quarter, according to The Deal data, with $12.5 billion in liabilities and $13.7 million in assets.
Energy companies Valaris plc, California Resources Corp., Noble Corp. plc and Denbury Resources Inc. each filed large Chapter 11 petitions with the U.S. Bankruptcy Court for the Southern District of Texas in Houston.
However, the third quarter continued to see bankruptcy filers from industries that, before Covid-19, had been less likely to wind up in bankruptcy.
Automotive technology company Garrett Motion Inc. filed for Chapter 11 bankruptcy to sell its assets to a KPS Capital Partners LP affiliate for roughly $2.1 billion. The company was spun off from Honeywell in 2018, a deal that left it with high leverage and asbestos liabilities. Then, Covid-19 shuttered its plant in Wuhan, China for two months and reduced demand for its products.
The pandemic’s effects on Virgin Atlantic Airways Ltd.’s business pushed the air carrier into Chapter 15 this quarter, as it restructures in the U.K. Virgin is implementing a restructuring in the U.K. that includes a £1.2 billion ($1.6 billion) rescue package after its reservations declined by 89% year over year since Jan. 1.
Virgin said in its filing that it expects demand to be only 25% of 2019 levels in the second half of the year. Some industry forecasts have predicted that demand for air travel in 2021 will be reduced 50% compared to 2019, Virgin said.
Other leisure and travel businesses entered bankruptcy this quarter, including Montreal-based Cirque du Soleil Inc., which filed under Canada’s Companies’ Creditors Arrangement Act after canceling all its shows, and educational travel company Lakeland Tours LLC, which filed for Chapter 11 with a prepackaged reorganization plan.
Subscribers have access to more of the deal data that fuel these rankings here.
Not a subscriber? Request a free trial here.