A Rising Tide? Update on Trends in Bankruptcy & Restructuring
The economic forecast now seems to be improving, despite the Wall Street Journal's report on Monday that personal bankruptcy filings have topped one million for the first three quarters of 2009, as corporations are now filing for Chapter 11 at a slower rate and the pace of defaults is slowing as well.
8 October 2009
A few months ago, I wrote about the gathering storm cloud of bankruptcy and restructuring engagements we were seeing here at Intralinks in the first half of 2009 as well as the high-value, high-profile bankruptcies that constantly appeared in the news.
The economic forecast now seems to be improving, despite the Wall Street Journal's report on Monday that personal bankruptcy filings have topped one million for the first three quarters of 2009, as corporations are now filing for Chapter 11 at a slower rate and the pace of defaults is slowing as well. (In fact, I observed in July from what we see here at Intralinks that we might see a decrease in the number of bankruptcy filings in the end of 2009 and into 2010 as equity and debt markets stabilize.)
Corporate bankruptcy and restructuring processes facilitated by Intralinks have slowed 21% this quarter versus the previous quarter. Realizing the number of these processes utilizing Intralinks as a virtual dataroom and/or collaboration platform is still high when viewed annually - up 90% over 2008 activity - the pace is beginning to slow. Interestingly, the number of bankruptcies and restructurings using Intralinks in North America this quarter came in at only 40% of the global total. (The Americas accounted for 60% of these engagements just a few months ago, as we announced last quarter.) This could indicate the U.S. may be poised to make a quicker comeback than we had previously anticipated despite recent jobless claims data and uncertainty heading into the corporate earnings announcement period.
Of course, the fallout from so many Chapter 11 filings and corporate restructurings will continue to settle as the year closes. For starters, the Supreme Court term that began this Monday will be dominated by cases concerning some of these massive corporate bankruptcies, corporate/executive compensation, and government oversight of the financial system.
Fourth quarter trends are likely to be telling as we approach the new year; I’ll explore them here on the Intralinks blog in December.
Matt Porzio joined Intralinks in 2003. As SVP Marketing & Strategic Business Development, he is responsible for managing and driving the strategic direction for Intralinks Dealspace including virtual data room and full deal lifecycle solutions for the M&A, Private Equity, Advisory, Corporate Development and Restructuring communities. Before joining Intralinks, he was a senior associate at Metzler, a German advisory firm, focused on cross-border M&A transactions.