Record US assets in bankruptcy, says BankruptcyData.com

By Paul A. Harris

St. Louis, Mo., Aug. 13 - While certainly not the biggest, US Airways became the latest publicly traded company to file Chapter 11 - and helped solidify what is already a record year for U.S. bankruptcy filings in terms of total assets, according to a press release from www.BankruptcyData.com.

The Boston-based web site that tracks corporate bankruptcies stated in the release that 129 publicly traded companies have filed for bankruptcy in 2002, listing a record pre-petition assets of $267.6 billion. The previous asset record was set in 2001 with $258.6 billion, the company stated, adding that at the height of the previous bankruptcy wave in 1990 a total of 115 publicly traded companies filed for bankruptcy listing total assets of just $73.4 billion.

Although the US Airways headlines are the latest, the credit markets will not be surprised to learn that it was telecom giant WorldCom, Inc. that did the real hauling with regard to the new record for U.S. corporate assets in bankruptcy and pushed the figures past the previous record.

www.BankruptcyData.com reports that with total assets of $103.9 billion WorldCom became the largest company ever to go into bankruptcy when it filed a Chapter 11 petition on July 21 in the U.S. Bankruptcy Court in Manhattan. WorldCom's assets are significantly higher than the previous record holder, Enron Corp., which filed on Dec. 3, 2001 with total assets of $63.3 billion, the Boston-based bankruptcy information service added.

Meanwhile on the liability side, in a July report titled "Corporate Defaults Refuse to Yield in 2002," Moody's Investors Service stated that a total of 89 corporate bond issuers defaulted on $76.7 billion in the first half of 2002, with 21 of those issuers defaulting on over one billion dollars each.

During the second quarter of 2002, 42 issuers defaulted on a total of $42.6 billion of bonds, setting a new record for quarterly default volumes, but not for defaulted issuer counts, the Moody's report added.

Non-US defaults, particularly in Europe and Argentina, rose as a proportion of the global total, Moody's noted, adding that 43% of defaulting issues in the second quarter were by non-US corporates.

Moody's mid-year forecast for the speculative-grade issuer-weighted default rate is 8.8% for calendar year 2002. However, the report added, deteriorating credit quality in the first half of 2002 makes it likely that a material decline in the default rate will not occur until late 2003.

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