More US big corporations going bankrupt
As the US economic slowdown claims more victims, industry data shows that large US cooperate bankruptcies have been accelerated in recent weeks.
The data compiled by Bankruptcy Data.com and reviewed by Reuters indicates that eight public companies with assets of over $1 billion have filed for bankruptcy protection in the last four-week period. It also suggests that it is the largest number of multibillion-dollar public company bankruptcies in a four-week period since the year began.
The BankruptcyData.com website tracks companies that have some form of publicly traded security including stocks or bonds. Brain Hamilton, co-founder and CEO of financial information company Sageworks Inc., said corporate revenue is down in the United States and when topline revenue is down, there’s less money to spread through expenses.
During the past few weeks, long-term lodging facility operator Extended Stay Inc, which had assets of $7.13 billion before its bankruptcy, and theme park operator Six Flags Inc, which had assets of about $3.03 billion both filed for bankruptcy. With assets of more than $91 billion, General Motors Corp filed for creditor protection on June 1, becoming the largest Chapter 11 bankruptcy case so far this year.
The widespread credit crunch and economic slowdown have taken such a toll on corporations and individuals that bankruptcy courts are struggling to manage the load.
Barbara Lynn, chair of the bankruptcy committee if the Judicial Conference of the United States, suggested at a congressional hearing that Congress authorize 13 new permanent bankruptcy judgeships and make 22 temporary bankruptcy judgeships permanent. She said there were almost 1.2 million bankruptcy petitions filed in the one-year period by March 31, 2009, nearly doubled the number of 2006.
Hamilton from Sageworks expects to see more bankruptcies for companies in the auto or real estate industries. He said it is widely known that the automakers are having great difficulty, if anyone is producing parts for them, then he is also having difficulties. According to Hamilton, anything around real estate is probably going to have difficulty for the latter part of 2009.
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