How Have Ch. 11 Filings and Case Attributes Changed Since COVID?
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décembre 20, 2024
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This article from ABI Journal was first published on December 1, 2024. The entire publication is available at: https://www.abi.org/abi-journal/archived-issues/dec-2024.
In an article for ABI Journal, Managing Director John Yozzo examines recent trends in corporate restructuring, particularly large Chapter 11 filings. While many expected a significant wave of defaults, filings have remained steady since 2010, with a brief spike in 2020 due to the COVID pandemic. After a period of subdued activity, restructuring picked up again in 2023, driven by rising interest rates and stressed capital structures. However, filings in 2024 have moderated, and some experts expect restructuring activity to slow in 2025 as interest rates ease.
One key trend is the faster processing of bankruptcy cases, due to the increased use of prepackaged and prenegotiated filings, which resolve creditor issues before formal filings. These filings now dominate large Chapter 11 cases, though freefall filings surged during the pandemic before returning to normal levels. Despite quicker case resolutions, professionals feel that restructuring activity, while steady, lacks the intensity of previous cycles.
The article also highlights a rise in Section 363 asset sales, which have become more common in recent years, especially in distressed cases. These sales, while efficient, can be time-consuming, particularly in freefall filings. Additionally, the sectors most affected by bankruptcy have shifted, with the energy sector slowing post-pandemic, while health care, financial services and IT have seen increased filings due to labor shortages, high costs and financial instability.
Reprinted with permission from ABI Journal, Vol. XLIII, No. 12, December 2024.
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décembre 20, 2024
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