Bankruptcy Filings Chapter 7, 11 and Mega Bankruptcies

Number of bankruptcy declarations

As of September 30, 2020, 138 companies with more than $ 100 million in assets have filed for Chapter 7 or Chapter 11 bankruptcy in 2020.

The number of bankruptcy filings increased sharply following the start of the COVID-19 pandemic in March 2020.

138: Number of bankruptcy filings in Q1-Q3 2020.

From April 2020 to September 2020, the average number of monthly bankruptcy filings was 17. This is considerably higher than the monthly averages after the onset of the 2008 financial crisis (11 in 2008 and 13 in 2009).

In July 2020, 24 companies with more than $ 100 million in assets filed for bankruptcy, almost four times the average rate of 6 deposits per month in 2005-2019. This is the second highest number of bankruptcy filings in a single month since 2005, behind just 25 bankruptcy filings in March 2009.

The number of bankruptcy filings by companies with more than $ 100 million in assets appears to have returned to lower levels after peaking in July 2020. There were 14 and 11 such bankruptcies in August 2020 and September 2020 , respectively.

Figure 2 Monthly Chapter 7 and Chapter 11 Bankruptcy Filings 2005 – Q3 2020

Source: BankruptcyData

Note: Only Chapter 7 and 11 bankruptcy filings by companies (public and private) with more than $ 100 million in assets are included. For 2005-2019, values ​​are monthly averages. For companies whose exact assets are not known, the lower bound of the estimated range is used. Asset values ​​are not adjusted for inflation. The World Health Organization (WHO) declared the COVID-19 pandemic on March 11, 2020.

Mega-bankruptcies

There were 52 mega-bankruptcies (over $ 1 billion in assets) in the first three quarters of 2020. This is more than the number of mega-bankruptcies in a full year in the period 2005- 2019, with the exception of 2009, which recorded 57 mega-bankruptcies.

52 Number of mega-bankruptcies in Q1-Q3 2020, more than any full year since 2005, except 2009.

The mining, oil and gas industry experienced 20 mega-bankruptcies in the first three quarters of 2020. Oil prices collapsed in March and April and still remain depressed, posing significant challenges to the oil and gas industry.

The retail industry experienced 10 mega-bankruptcies in the first three quarters of 2020. The pandemic has created an increasingly difficult environment for traditional retailers.

The two main industries: Mining, Oil and Gas; and retail – accounted for 30 mega-bankruptcies or 58% of all mega-bankruptcies in the first three quarters of 2020. The number of mega-bankruptcies in the mining, oil and gas industry has remained high since the collapse in oil prices in 2014-2016. , and the industry saw an increase in mega-bankruptcies starting in 2019, before the COVID-19 pandemic. In contrast, there were few mega-bankruptcies in the retail industry before the pandemic.

Figure 3: Heat map of mega-bankruptcies by industry 2005-Q3 2020

Bankruptcy heat map

Source: BankruptcyData

Note: Only Chapter 11 and 7 bankruptcy filings from companies with more than $ 1 billion in assets are included. The SIC Industry Division “Mining” is labeled “Mining, Oil & Gas” to reflect specific industries under the Industry Division. The SIC industry division “Transport, communications, electricity, gas and sanitary services” is labeled “Transport, communications and utilities”. There are no bankruptcies in two industrial divisions of SIC: “Public administration” and “Unclassifiable”. These two SIC industrial divisions are therefore not represented. For companies whose exact assets are not known, the lower bound of the estimated range is used. Asset values ​​are not adjusted for inflation. 2020 includes from January 1, 2020 to September 30, 2020

Executive summary: COVID-19 pandemic triggers wave of major corporate bankruptcies

COVID-19 pandemic sparks wave of mega business bankruptcies

Read the report: Trends in Bankruptcies and Financial Hardship of Large Firms: 2005 – Q3 2020.

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