COVID-19 Pandemic Spurs Wave of Mega Corporate Bankruptcies

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“Mega bankruptcy filings were concentrated in two industry sectors—mining, oil and gas; and retail trade—as oil prices collapsed and remain depressed and traditional retailers faced an increasingly difficult environment.”

The economic disruptions that the COVID-19 pandemic has sparked worldwide have triggered a wave of large corporate bankruptcy filings in 2020. This trend is particularly notable among companies with more than $1 billion in reported assets, according to a new report released today by Cornerstone Research.

The report, Trends in Large Corporate Bankruptcy and Financial Distress: 2005–Q3 2020, found that 138 companies with over $100 million in assets filed for Chapter 7 or Chapter 11 bankruptcy protection in the first three quarters of 2020. That figure is 84% higher than the 75 bankruptcies with over $100 million in assets filed during the same period in 2019. Courts in Delaware, the Southern District of Texas, and the Southern District of New York accounted for 80% of the bankruptcy filings during the first three quarters of 2020.

There were 52 mega bankruptcies (those filed by companies reporting over $1 billion in assets) in the first three quarters of 2020, more than the number of mega bankruptcies in any full year during 2005–2019 except for 2009, which had 57 mega bankruptcies.

“Mega bankruptcy filings were concentrated in two industry sectors—mining, oil and gas; and retail trade—as oil prices collapsed and remain depressed and traditional retailers faced an increasingly difficult environment,” said Allie Schwartz, a report coauthor and Cornerstone Research principal. “Those two industries accounted for more than half of the mega bankruptcies in the first three quarters of 2020.”

In each of the first three quarters of 2020, 34, 55, and 49 companies with over $100 million in assets filed for bankruptcy, respectively, compared to the quarterly average of 19 for the 2005–2019 period. The second quarter’s 55 filings marked the second-highest total for any quarter since 2005, only behind the 65 bankruptcies in the first quarter of 2009 during the 2008 financial crisis. However, bankruptcy filings appear 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, compared to 24 in July 2020.

About Cornerstone Research
Cornerstone Research provides economic and financial consulting and expert testimony in all phases of complex litigation and regulatory proceedings. The firm works with an extensive network of prominent faculty and industry practitioners to identify the best-qualified expert for each assignment. Cornerstone Research has earned a reputation for consistent high quality and effectiveness by delivering rigorous, state-of-the-art analysis for more than 30 years. The firm has over 700 staff and offices in Boston, Chicago, London, Los Angeles, New York, San Francisco, Silicon Valley, and Washington.

See Cornerstone Research’s website for more information about the firm’s capabilities in economic and financial consulting and expert testimony.

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