Published by National Real Estate Investor | December 22, 2020
The 44 bankruptcies by companies with over $50 million since Oct. 1 make the fourth quarter the worst period since 2009.
(Bloomberg)—Last month saw 16 large companies file for bankruptcy protection in the U.S., the most of any December since 2011, according to Bloomberg data.
The 44 bankruptcies by companies with over $50 million since Oct. 1 make the fourth quarter of 2020 the worst for that period since 2009.
Several of the companies that filed for Chapter 11 protection in December cited the Covid-19 pandemic as a factor in their distress. Two different coal companies, a Brooklyn hotel, a California gym chain and an offshore driller said the virus was at least part of the reason for their filings.
Experts have said the pain will continue in 2021. Real estate could be a specific area that comes under pressure, said Cynthia Romano, global director of Cohn Reznick LLP’s restructuring and dispute resolution practice.
“Real estate companies are not going to be able to stomach rent abatement for another 12 months,” she said in an interview.
“Real estate will be the next domino to fall unless there’s some kind of relief.”
The past year would have been even worse if lenders hadn’t rushed to the rescue, bailing out companies that were pushed toward restructuring by pandemic shutdowns, said Jon Goulding, a managing director in Alvarez & Marsal Inc.’s restructuring practice.
“The capital markets have been wide open to help folks get to the other side,” he said.
Those huge debt balances could also sandbag President-elect Joe Biden’s plans to rebuild the economy, with the billions of dollars that U.S. companies borrowed to survive the pandemic potentially putting a chill on investment and hiring.
