Bankruptcy professionals have been fixated on Energy Future Holdings Corp.’s behemoth
Chapter 11 in the second quarter of 2014 — the seventh largest Chapter 11 in U.S.
bankruptcy history. Prior to that filing, however, bankruptcy activity was slower in the
first several months of the year, partially due to persistently easy credit conditions. On
a consolidated basis, 331 Chapter 11s were filed by companies with $1 million or more
worth of debt in the first quarter of 2014, down from 472 in the first three months of 2013.
The percentage of Chapter 11 debtors listed as single asset real estate rose, while the
number of Chapter 11 petitions listing $1 billion or more was unchanged at four. Four
Chapter 15 petitions from non-U.S. companies involved debt of $1 billion or more —
twice as many as in the first three months of 2013.
Q1 Supplement – May 2014
BAnkruptcy &
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FiliNgs By stAtE. Massachusetts had the sharpest rise in bankruptcies in the first quarter of 2014. The first three months of the year saw four billion-dollar bankruptcies nationwide, matching the caseload at the same time last year. ...3
lARgEst FiliNgs ANd BlooMBERg CoRPoRAtE BANkRuPtCy iNdEx. The Bloomberg Corporate Bankruptcy Index ended the first quarter of 2014 at a level of 61.69, down 2.62 percent from the close of the fourth quarter of 2013. Year over year, the index is down 18.38 percent. Mach Gen LLC, an operator of gas-fueled electricity generating plants, was the largest Chapter 11 case in the first quarter. ...4
siNglE AssEt REAl EstAtE. Twenty-two percent of all Chapter 11s were identified as single asset real estate in the first quarter of 2014, up from 19 percent in the same period a year ago. Illinois saw the biggest jump in real estate filings. ...5 ChAPtER 15 PEtitioNs. Nine Chapter 15 business petitions were filed by foreign debtors in the U.S. in the first quarter. That’s up from eight cases in the same period a year ago. Brazil and the Cayman Islands each had two businesses that filed Chapter 15 cases. ...6
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Business Chapter 11s Fall in Most states; texas sees Uptick in Petitions
50 150 250 350 450 550 650 3/12 6/12 9/12 12/12 3/13 6/13 9/13 12/13 3/14 N um be r o f C hap te r 11 Pet iti on sSource: Bloomberg Brief
Affiliated cases have been consolidated.
247 56 11 10 3 4 363 77 14 13 1 4 $1 million - $10 million $10 million - $50 million $50 million - $100 million $100 million - $500 million $500 million - $1 billion $1 billion or more
Source: Bloomberg Brief
2014 2013 -100% +300% WY TX ND SD NE KS IA MO WV AL MD MA NJ CT RI WA OR CA ID NV AZ UT MT CO NM OK MN AR LA MS TN KY IL WI MI IN OH GA SC NC VA PA NY VT NH ME FL AK HI DE
q1 2014 Review: Filings By state
decline in Chapter 11 Filings Continued in Q1
Number of large Cases unchanged From Q1 ’13
Three-hundred and thirty-one Chapter 11s involved debt of $1 million or more, down from 349 in Q4 2013 and 472 in Q1 2013.
Bankruptcies fell in most U.S. states in the first quarter com-pared to the same quarter last year. Massachusetts bucked the trend, however, with total filings up 300 percent year on year. The state had four business petitions with debt of $1 million or more, up from one case in the same period a year ago.
In terms of volume, California and Texas had the largest num-ber of business Chapter 11s involving debt of $1 million or more
in the first three months of 2014.
California, which had 40 Chapter 11s, saw a 27 percent decline in the total number of business bankruptcies, while Texas saw a 48 percent jump in petitions to 40 filings. Idaho, which had five business filings in the first quarter of 2013, had no bankruptcies with $1 million or more in liabilities in the first quarter of 2014.
Four Chapter 11 cases involved liabilities of $1 billion or more in the first three months of 2014, matching the caseload of Q1 2013.
60 70 80 90 100 110 120 130 3/2012 9/2012 3/2013 9/2013 3/2014 Source: Bloomberg LP
Bloomberg Corporate Bankruptcy index Declined in q1 2014
q1 2014 Review: laRgest Filings
click on below for more information. The Bloomberg Corporate BankruptcyIndex ended the first quarter of 2014 at a level of 61.69, down 2.62 percent from the close of the fourth quarter of 2013.
Year over year, the index is down 18.38 percent.
The largest Chapter 11 bankruptcy filings during the first quarter of 2014 included Mach gen llC, sorenson Communications inc, the Budd Co inc, and usEC inc.
The Index, found at {BNKRINDX <In-dex> <GO>} on the Bloomberg Profes-sional Service, is a barometer of recent Chapter 11 activity for businesses with debt of $100 million or more.
–Kurt Kester
Mach gen llC, an operator of gas-fueled electricity generating plants, was the largest business bankruptcy in the first quarter of 2014. The debtor,
which filed in Delaware, listed liabilities of $1.6 billion.
— Alvaro Maruenda Rodrigo
Electric Plant operator is largest Chapter 11 Business Bankruptcy of Q1 2014
DEBTOR VENUE DEBTOR COUNSEL JUDGE DATE OF FILING INDUSTRY LIABILITIES LISTED
Mach Gen LLC. Bankr. D. Del. Milbank Tweed Hadley & McCloy LLP Richards, Layton & Finger Mary F. Walrath 03/03/14 Electric $1.60 billion Sorenson
Communi-cations Inc. Bankr. D. Del. Pachulski Stang Ziehl & Jones LLP Brendan Linehan Shannon 03/03/14 Telecommunications $1.40 billion The Budd Co. Inc. Bankr. N.D. Ill. Proskauer Rose LLP Jack B. Schmet-terer 03/31/14 Auto Parts & Equipment $1.11 billion USEC Inc. Bankr. D. Del. Richards, Layton & Finger Latham & Watkins LLP Christopher S. Sontchi 03/05/14 Mining $1.07 billion Legend Parent Inc. Bankr. S.D. N.Y. Dechert LLP Robert E. Grossman 03/20/14 Software $876.28 million Optim Energy LLC. Bankr. D. Del. Bracewell & Giuliani LLP Morris Nichols Arsht & Tunnell LLP Brendan Linehan Shannon 02/12/14 Commercial Services $716.56 million QCE Finance LLC. Bankr. D. Del. Richards, Layton & Finger Akin Gump Strauss Hauer & Feld LLP Peter J. Walsh 03/14/14 Retail $618.44 million Global Geophysical
Services Inc. Bankr. S.D. Texas Baker Botts LLP Richard S. Schmidt 03/25/14 Oil & Gas Services $468.66 million Event Rentals Inc. Bankr. D. Del. Fox Rothschild LLP Peter J. Walsh 02/13/14 Commercial Services $246.00 million Tuscany
Interna-tional Holdings USA
-100% +700% WY TX ND SD NE KS IA MO WV AL MD MA NJ CT RI WA OR CA ID NV AZ UT MT CO NM OK MN AR LA MS TN KY IL WI MI IN OH GA SC NC VA PA NY VT NH ME FL AK HI DE
q1 2014 Review: Real estate
81% 19% 78% 22% Other Single Asset Real Estate
Source: Bloomberg Brief
2014 2013 0 5 10 15 20 25 30 35 CA NY TX FLA 2013 2014
Source: Bloomberg Brief
Real Estate Bankruptcies increase slightly
California Real Estate Petition Activity Rises
There were eight single asset real estate Chapter 11s involving debt of $1 million or more in Illinois in the first quarter. That’s up from one single asset real estate filing a year ago, making it the state with the biggest jump in these petitions year over year.
Other states that saw a big jump in real estate bankruptcies include Texas, Pennsylvania, Arizona and New Jersey.
California had the largest number of real estate bankruptcies with 31, up from 10 a year ago. Texas had 30 single asset real estate cases, up from four in the same period a year ago.
Idaho, Nevada and South Carolina saw a drop in real estate bankruptcies in the first quarter from the same period a year ago.
illinois sees Biggest Jump in single asset Real estate Caseload
Twenty-two percent of all Chapter 11s involving $1 million or more in liabilities were identified as single asset real estate in the first quarter of 2014, up from 19 percent in the same period a year ago.
California was the busiest state with real estate bankruptcies in the first quarter; it saw 31 such cases, up from 10 a year ago.
0 1 2 3 4 5 Bankr. D. Delaware
Bankr. E.D. N.Y. Bankr. N.D. of Texas Bankr. S.D. Fla. Bankr. S.D. N.Y.
Source: Bloomberg Brief
11.1% 11.1% 11.1% 11.1% 11.1% 22.2% 22.2% Canada England British Virgin Islands Australia Japan Brazil Cayman Islands* Source: Bloomberg LP
* Includes one Chinese solar panel manufacturer. 11% 11% 11% 22% 45% consumer discretionary communications utilities energy financial Source: Bloomberg Brief
q1 2014 Review: ChaPteR 15 Petitions
More Chapter 15 Cases involved $1 Billion or More in liabilities During the First quarter
New york’s southern district Busiest With Ch. 15s
CORpORATE DEBTOR DEBTOR COUNSEL JUDGE ASSETS LIABILITIES DATE OF FILING
Hibu Inc. (Yellow Book Sales & Distribution Co.) Kirkland & Ellis Robert E. Grossman More than $1B More than $1B Jan. 28, 2014 Rede Energia S.A. White & Case, LLP Shelley C. Chapman More than $1B More than $1B Jan. 16, 2014 Fletcher Income Arbitrage Fund Ltd. (In Liquidation) Satterlee Stephens Burke & Burke LLP Robert Gerber $1M to $10M $100M to $500M Jan. 17, 2014 Electro Sonic Inc. (Electro Sonic of America LLC) The Rosner Law Group LLC Mary Walrath $1M to $10M $1M to $10M Feb. 10,2014 Cosmorex Ltd./Creative Finance Ltd. Reid Collins & Tsai LLP Robert E. Gerber $1M to $10M $10M to $50M Feb. 19, 2014 Suntech Power Holdings O'Melveny & Myers LLP Stuart M. Bernstein More than $1B More than $1B Feb. 21, 2014 Octaviar Administration Pty. Ltd. Chadbourne & Parke LLP Shelley C. Chapman $50M to $100M More than $1B Feb. 27, 2014 Petroforte Brasileiro de Petroleo Ltda. Gregory S. Grossman, Esq Robert A. Mark $100M to $500M $100M to $500M March 7, 2014
Mt Gox Co. Ltd. Baker & McKenzie LLP Stacey G. Jernigan $10M to $50M $50M to $100M March 9, 2014
Brazil, Cayman Businesses drive Ch. 15 Activity
Financials dominate Chapter 15 Petitions
Nine Chapter 15 business petitions were filed by foreign debtors in the U.S. in the first quarter. That’s up slightly from eight cases in the same period a year ago.
Brazil and the Cayman Islands each had two businesses that filed Chapter 15 cases. A year ago, Canada was the biggest source of Chapter 15s by non U.S. businesses; four Canadian companies filed Chapter 15s in the first three months of 2013. This year only one company was from Canada.
Four Chapter 15s in the first quarter of 2014 listed liabilities of $1 billion or more, up from two cases with $1 billion or more in debt in the first quarter of 2013.
New York’s southern district remained the busiest venue for Chapter 15s petitions. Five foreign debtors chose New York’s southern district as the venue for their Chapter 15 in the first quarter of 2014. In the first three months of 2013, New York had six such cases.
Five of nine Chapter 15 debtors chose New York’s southern
district as their venue in the first three months of 2014. Rede Energia and Petroforte Brasileiro were the two Brazilian Chapter 15s of Q1; Rede listed more than $1 billion in liabilities. Financial businesses such as Fletcher Income and Cosmorex were the most active non-U.S. debtors filing Chapter 15s.
