The Year in Bankruptcy: 2010
Jones Day’s Charles Oellerman and Mark Douglas have just issued The Year in Bankruptcy: 2010.Â Â It is a (relatively) concise, thorough (81 pages), and useful compendium of bankruptcy statistics, trend analyses, case law highlights, and legislative updates for the year.
What to expect for 2011?Â According to the authors:
[M]ost industry experts predict that the volume of big-business bankruptcy filings will not increase in 2011.Â Also expected is a continuation of the business bankruptcy paradigm exemplified by the proliferation of prepackaged or prenegotiated chapter 11 cases and quick-fix section 363(b) sales. Companies that do enter bankruptcy waters in 2011 are more likely to wade in rather than freefall, as was often the case in 2008 and 2009. More frequently, struggling businesses are identifying trouble sooner and negotiating prepacks before taking the plunge, in an effort to minimize restructuring costs and satisfy lender demands to short-circuit the restructuring process.Â Prominent examples of this in 2010 were video-rental chain Blockbuster Inc.;Â Hollywood studio Metro-Goldwyn-Mayer, Inc.;Â and newspaper publisher Affiliated Media Inc. Industries pegged as including companies â€śmost likely to failâ€ť (or continue foundering) in 2011 include health care, publishing, restaurants, entertainment and hospitality, home building and construction, and related sectors that rely heavily on consumers.Â Finally, judging by trends established in 2010, companies that do find themselves in bankruptcy are more likely to rely on rights offerings than new financing as part of their exit strategies.