Large Corporate Bankruptcy Filings Continue to Fall

Bankruptcy filings of larger companies continued to fall in the first half of 2022, according to Cornerstone Research. Currently they’re at below normal levels, which makes sense if you consider that the economic conditions of the pandemic would have shaken out some weaker companies.

The report looked at Chapter 7 and Chapter 11 bankruptcies among public and private companies with at least $100 million in assets. Notably, that wouldn’t include Chapter 13 bankruptcies in which companies petition to reorganize. While a Chapter 7 or 11 bankruptcy means a company going out of business, the conditions of a Chapter 13 bankruptcy can mean vendors, including landlords, taking significant haircuts.

“[The report] finds that 70 large companies filed for bankruptcy in 2021, down significantly from 155 in 2020 and below the annual average of 78 filings since 2005,” the press release said. “In the first half of 2022, only 20 large companies filed for bankruptcy, compared to midyear totals of 43 in 1H 2021 and 89 in 1H 2020. The 20 bankruptcies in 1H 2022 were the lowest midyear total since the second half of 2014.”

In 2021, there were 70 bankruptcies of companies at this size and 28 of them happened in the first quarter, while the effects of the pandemic were still in relatively high gear. “There were 20 “mega bankruptcies” (those filed by companies with over $1 billion in reported assets) in 2021, a substantial decline from the 60 mega bankruptcies filed in 2020,” according to the report.

In the first half of this year, 60% of the bankruptcies were filed by private companies, “substantially higher than the annual average of 40% from 2005 to 2011,” said the report. Only four were mega bankruptcies, a significant drop from the average of 11. “The largest bankruptcies in 2021 and 1H 2022 were filed by Seadrill Limited, with $7.29 billion in assets at the time of filing, and Talen Energy Supply LLC, with $10 billion in assets at the time of filing.”

Delaware was the venue for 34% of filings in 2021 and 50% of all in the first half of 2022.

In the SIC industry division of finance, insurance, and real estate, there were six filings in the first half of 2022. That is slightly over half the annual average of 10.2, but a fraction of the 31 filings in 2009 after the global financial collapse.