(Bloomberg) – U.S. bankruptcy courts greeted a well-known cast last week as two oil drills, a Texan electricity company and a real estate developer sought protection from creditors.
As of this month, 15 companies with liabilities of at least $ 50 million have filed for bankruptcy, compared to 16 in all of March 2020, according to Bloomberg. That’s more than the average of 12 for the third month of the year over the past decade, and the pace to top the 21 filings in March 2018, which were the most since 2009.
According to Bloomberg, last week’s five big filings have increased the reach of the year to 41 by March 21, at the pace of 2020.
Many of this year’s filings are quick debt-for-equity swaps where lenders take on a broken business, said Eric Snyder, chairman of the bankruptcy practice at law firm Wilk Auslander. Government incentives, freely available debt and eviction moratoriums have kept other types of bankruptcies under wraps, he said in an interview.
“Anyone can buy their way out of trouble,” said Snyder. “There’s just no need to file for bankruptcy” unless lenders enforce the problem, as they do in the energy and retail sectors, he said.
Gas drill Nine Point Energy Holdings Inc. last week filed a preliminary contract to transfer ownership of the property to the lenders. Also a drill, Highpoint Resources Corp. went into bankruptcy and left after gaining court approval for a plan to sell itself to Bonanza Creek Energy Inc.
Brilliant Energy LLC, an electricity retailer, became the youngest victim of the Texas freeze and the first to move straight to a Chapter 7 liquidation. In contrast to the case of the Brazos Electric Power Cooperative, Brilliant is not stiffening the state grid operator through bankruptcy, but instead owes around 60 million US dollars to a trading unit of DTE Energy Co.
A housing estate owner in the Greenpoint neighborhood of Brooklyn, New York filed Chapter 11. Dupont Street Developers LLC listed assets of $ 57.1 million and liabilities of $ 58.9 million in its petition.
Need creeps deeper
The number of bad bonds and loans traded fell to around $ 93 billion on March 19 – a 1.6% decrease from the previous week. The number of troubled bonds fell 0.5%, while bad loans fell 4.6%.
According to trace data, there were 267 distressed bonds from 139 issuers trading on Monday. This equates to the previous week’s 257 bonds from 133 issuers, but is well below the 1,896 troubled bonds on March 23.
According to Bloomberg data, Diamond Sports Group LLC had the most heavily burdened debt from issuers who hadn’t filed for bankruptcy as of March 19.
Top 5 Distressed Issuers Debt ($ B)
Diamond Sports Group LLC 8.0
Transocean Inc 4.2
Odebrecht Offshore Drilling Finance 2.5
GTT communication 2.3
Digicel Group 1.9
– With the support of Jenny Sanchez and Anik Chattopadhyay.
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