Outlook 2010: Global economic crisis breeds 2009 bankruptcy frenzy

By Caroline Salls

Pittsburgh, Dec. 31 - The global economic and credit market crisis resulted in an unprecedented number of bankruptcy filings in 2009, with companies with massive debts like CIT Group, Inc., Charter Communications, Inc. General Motors Corp. and Chrysler LLC leading the list of headliners.

CIT, a provider of financing to small businesses and middle market companies, filed for bankruptcy in November, reporting $64.91 billion of total debt as of June 30. CIT emerged from its pre-packaged bankruptcy on Dec. 10.

Charter listed $24.186 billion of total debt when it filed for bankruptcy in March. The company emerged from bankruptcy in late November after reducing that debt by roughly $8 billion.

Meanwhile, GM said when it filed for bankruptcy in June that it had a whopping $172.81 billion in debt at March 31, 2009, and Chrysler said it had more than $1 billion in debt when it filed in April 2009.

Both GM and Chrysler have since sold their assets and left liquidating companies in their wake to close out the bankruptcy cases.

CIT, GM and Chrysler were also representatives of two of the three sectors that dominated the bankruptcy scene this year. Specifically, the transportation, the financial and the media and entertainment sectors fared the worst in 2009.

Besides auto moguls GM and Chrysler, other transportation and automotive industry companies that filed for bankruptcy in 2009 included Contech LLC, Fleetwood Enterprises, Inc., Metaldyne Corp., Visteon Corp., Genmar Holdings, Inc., Proliance International, Inc., Stant Corp., Cooper-Standard Automotive, Inc., FormTech Industries LLC, Holley Performance Products, Inc., Accuride Corp. and GPX International Tire Corp.

Financial company blues

Financial companies also recorded a large number of bankruptcies amid the recession, including Team Financial, Inc., Thornburg Mortgage, Inc., Capital Corp. of the West, BankUnited Financial Corp., FirstPlus Financial Group, Inc., Vineyard National Bankcorp, Taylor, Bean & Whitaker Mortgage Corp., Colonial BancGroup Inc., Guaranty Financial Group, Inc., CIB Marine Bancshares, Inc., Palm Beach Finance Partners, LP, AmTrust Financial Corp. and Capmark Financial Group Inc.

Several financial companies also made Chapter 7 bankruptcy filings, including Silver State Bancorp, MRU Holdings, Inc., Irwin Financial Corp., Advanta Corp. and Temecula Valley Bancorp Inc.

Media sector suffers

Among the media and entertainment companies filing for bankruptcy in 2009 were Muzak Holdings LLC, Midway Games, Inc., Trump Entertainment Resorts, Inc., Young Broadcasting, Inc., Philadelphia Newspapers LLC, ILX Resorts Inc., Magna Entertainment Corp., Herbst Gaming, Inc., Sun-Times Media Group, Inc., Tropicana Atlantic City Casino and Resort, the Phoenix Coyotes and Norwood Promotional Products Holdings, Inc.

Other media and entertainment companies that filed in 2009 included Six Flags, Inc., Fontainebleau Las Vegas LLC, Twin River Casino, Station Casinos Inc., Reader's Digest Association, Inc., Freedom Communications Holdings, Inc., Triple Crown Media Inc., Chicago National League Ball Club, LLC, Moonlight Basin Ranch, LP, Majestic Star Casino, LLC, Citadel Broadcasting Corp., NextMedia Group, Inc., Heartland Publications LLC and Progressive Gaming International Corp.

The retail and housing and real estate sectors also continued to suffer in 2009.

Retail companies that filed for bankruptcy during the year included Fairfield Residential, LLC, Gottschalks Inc., Goodys, LLC, Bruno's Supermarkets, LLC, Ritz Camera Centers Inc., Joe's Sports & Outdoor, Drug Fair Group, Inc., BI-LO, LLC, Filene's Basement, Anchor Blue Retail Group, Inc., Eddie Bauer Holdings, Inc., Bashas' Inc., Finlay Enterprises, Inc., Escada (USA), Inc., Simmons Bedding Co., Penn Traffic Co., The Walking Co., Extended Stay, Inc., Broadstripe LLC, Hartmarx Corp. and Generation Brands.

Meanwhile, housing, homebuilding and real estate companies that filed for bankruptcy in 2009 included Tarragon Corp., Meruelo Maddux Properties, Stock Building Supply Holdings, LLC, Building Materials Holding Corp., Erickson Retirement Communities, LLC, Champion Enterprises, Inc., Jones Stephens Corp. and California Coastal Communities, Inc.

Pre-pack popularity

The year also saw a significant surge in the popularity of pre-packaged bankruptcy filings, which allowed companies to negotiate the terms of their restructuring and solicit creditor votes before filing for bankruptcy.

These "pre-packs" allowed the companies to complete the restructuring process in two to three months and in some cases mere weeks.

Although not all were pre-packaged filings, companies that both filed for and emerged from bankruptcy in 2009 included Apex Silver Mines, Ltd., Star Tribune Co., Spectrum Brands, Inc., BPI Energy Holdings, Inc., Pliant Corp., Journal Register Co., Milacron Inc., Masonite International Inc., Primus Telecommunications Group, Inc., Greenbrier Hotel Corp., Charter Communications, Inc., United Subcontractors, Inc., Noble International, Ltd., Dayton Superior Corp., Source Interlink Cos., Inc., U.S. Shipping Partners, LP and Mark IV Industries, Inc.

Others in and out of bankruptcy during the year included Energy Partners, Ltd., J.G. Wentworth, LLC, Caraustar Industries, Inc., MagnaChip Semiconductor, Ltd., Isolagen, Inc., Lear Corp., J.L. French Automotive Castings, Inc., New Vision Television, Cygnus Business Media, Inc., Baseline Oil & Gas Corp., TransMeridian Exploration, Inc., Samsonite Co. Stores, LLC, Triple Crown Media, Inc., True Temper Sports, Inc., Graphics Properties, Inc., Questex Media Group, Inc., Nortek Inc., ION Media Networks, Inc., Lazy Days' R.V. Center, Inc., Aurora Oil & Gas Corp., Panolam Industries International Inc. and Hayes Lemmerz International, Inc.

New filings

The 2009 crop of bankruptcy filings also included Merisant Worldwide, Inc., Tronox Inc., Nortel Networks Corp., Smurfit-Stone Container Corp., Renew Energy LLC, Incentra Solutions, Inc., Crescent Oil Co., Inc., Foothills Resources, Inc., Aleris International, Inc., BearingPoint, Inc., Foamex International Inc., Qimonda Richmond, LLC/Qimonda North America Corp., Spansion Inc., Pacific Energy Resources Ltd., Fairchild Corp., Chemtura Corp., MMC Precision Holdings Corp., Crusader Energy Group Inc., Idearc Inc., Harvest Oil & Gas, LLC, Saratoga Resources, Inc., Nova Biosource Fuels, Inc., Aventine Renewable Energy Holdings, Inc. NexPak Inc. and Latham International, Inc.

Also filing in 2009 were AbitibiBowater Inc., Asyst Technologies, Inc., Opus South Corp., DBSD North America, Inc., Pacific Ethanol Holding Co., LLC, TXCO Resources, Inc., Mahalo Energy Ltd., R.H. Donnelley Corp., Butler International, Inc., Crescent Resources, LLC, MIG, Inc., Fraser Papers Inc., Sea Launch Co. LLC, Global Safety Textiles Holdings LLC, CCS Medical, Inc., RathGibson, Inc., Oscient Pharmaceuticals Corp., Luna Innovations Inc., Arclin, ProtoStar, Ltd., Altra Nebraska, LLC, Everest Holdings LLC, Cynergy Data, LLC, Pisces Energy, LLC, Trident Resources Corp., Barzel Industries Inc., Velocity Express Corp., PTC Alliance, Edge Petroleum Corp., Stallion Oilfield Services Ltd., FairPoint Communications, Inc., Otter Tail Ag Enterprises, LLC, deCODE genetics, Inc., GSI Group Inc., Vion Pharmaceuticals, Inc., TLC Vision Corp. and Hawkeye Renewables, LLC.

Meanwhile, a handful of companies made Chapter 15 bankruptcy filings in connection with insolvency proceedings filed in foreign countries, including Railpower Hybrid Technologies Corp., Independencia SA and Canwest Global Communications Corp.

In addition, Wilton Holdings Inc. had an involuntary Chapter 11 case filed against it that was later dismissed, and New York City Off-Track Betting Corp. made a Chapter 9 bankruptcy filing.

Out of the woods

Delphi Corp. emerged from bankruptcy in 2009 after a prolonged delay resulting from termination of an equity commitment.

The news was also better this year for the airline industry, as MAXjet Airways, Inc., ATA Airlines, Inc., Skybus Airlines, Inc., and Frontier Airlines Holdings, Inc. all exited bankruptcy in 2009.

Additionally, Asarco LLC ended its four-year stint in bankruptcy after a district court judge confirmed a plan of reorganization that put the company back under the control of parent Americas Mining Corp.

Other companies that emerged from bankruptcy in 2009 included Iridium LLC, Interstate Bakeries Corp., American Capital Corp., Sea Containers Ltd., Bayonne Medical Center, Exaeris Inc., Nutritional Sourcing Corp., Brotman Medical Center, Propex Inc., Buffets Holdings, Inc., Quebecor World Inc., Protected Vehicles Inc., Cornerstone Ministries Investments, Inc., BWAS Holdings, Inc., Charys Holding Co., Inc., Wellman, Inc., Utah 7000, LLC, Diamond Glass, Movida Communications, Inc. and Kimball Hill Homes.

Also completing their reorganization in 2009 were Superior Offshore International, Inc., Tropicana Entertainment, LLC, Village Hotel Investors, LandSource Communities Development LLC, Caruso Homes, Inc., Syntax-Brillian Corp., SemGroup, LP, New Century Energy Corp., WCI Communities, Inc., Boscov's Department Store, LLC, Hines Horticulture, Inc., Luminent Mortgage Capital, Inc., Motor Coach Industries, Sleep Innovations, AtheroGenics, Inc., Metromedia Steakhouses Co., LP, Yellowstone Mountain Club, LLC, TH Agriculture & Nutrition, LLC, Bally Total Fitness, EZ Lube LLC, Special Devices, Inc., CDX Gas, LLC, Key Plastics LLC, Constar International Inc., Recycled Paper Greetings, Inc. and VeraSun Energy Corp.

Conversions and dismissals

A number of companies' Chapter 11 cases were either converted to Chapter 7 bankruptcy or dismissed during the year after they sold their assets and either the company or its creditors decided there was no chance of rehabilitation or Chapter 11 plan distributions.

Among the cases converted in 2009 were HomeBanc Corp., Avado Brands, Inc., Galaxy Energy Corp., IdleAire Technologies Corp., HRP Myrtle Beach Holdings LLC, Agriprocessors, Inc., National Wholesale Liquidators, Eclipse Aviation Corp., Polaroid Corp., Hereford Biofuels, LP, Fortunoff, WL Homes, LLC, Monaco Coach Corp., Indalex Holdings Finance, Inc., Norwood Promotional Products Holdings, Inc. and Kirk Corp.

The cases dismissed in 2009 included American Community Newspapers LLC, TallyGenicom, LP and EnCap Golf Holdings, LLC, which was dismissed because the bankruptcy court ruled that its plan of reorganization was not feasible.

Espre Solutions, Inc.'s case was closed in December after the estate was fully administered.

Looking ahead

Looking ahead, myriad reorganization plans were confirmed in December, paving the way for companies to wrap up their bankruptcy cases.

Among those planning to emerge soon were Building Materials Corp., Edge Petroleum Corp., Luna Innovations Inc., BearingPoint, Inc., CIB Marine Bancshares, Inc., Fairchild Corp., Lenox Group, Inc., Merisant Co., General Growth Properties Inc., GW Limited 51 Inc., Idearc Inc., Pilgrim's Pride Corp., Northeast Biofuels, LP, BearingPoint, Inc. and Arclin.

Additionally, Black Gaming, LLC announced on Dec. 23 that it had reached an agreement with holders of 70% of its $125 million senior secured notes on a restructuring of the company's debt and that it planned to make a pre-packaged bankruptcy filing "shortly."

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