- The Newsletter
- Meet George
- Investment Advice
- Member Features & Benefits
- Current Letter
- Our Portfolio
- Expanded Stock Pick Analysis
- Closed Out Recommendations
- Previous Letters & Search
- Turnaround Investing Reports
- Purchase Recommendation Updates
- Bankruptcy Securities Pricing
- Distressed Investing Blog
Bankruptcy filings by publicly traded companies in 2012 are running at roughly the same pace as last year – 31 filings so far this year versus 37 at the same time last year. This year’s corporate bankruptcies are somewhat larger (both including and excluding financial companies) than the filings during last year’s first half, but in 2011 we saw a number of big companies go into Chapter 11 late in the year.
We are seeing a few more financial companies file for bankruptcy this year than last, but nowhere near the number that we saw from 2007 through 2010. There are also three aviation related companies (Hawker, Pinnacle and Global) on the list of largest bankruptcies of 2012. Otherwise, there are no obvious trends in the types of public companies going bankrupt.
Until we get a few more big Chapter 11 filings, we don’t see much in the way of great bankruptcy investing opportunities. The bonds of AMR (the parent company of American Airlines, which filed for Chapter 11 last November) could have further gain potential, but they have already run up quite a long way. Kodak is probably the next most prominent Chapter 11 case, but the value of Kodak bonds will depend almost entirely on the value of the company’s patents, which is very hard to determine. We recommend that investors be patient because we expect better opportunities down the road.
For our thoughts on why we may see more bankruptcy filings in the not-too-distant future, as well as our 2012 bankruptcy statistics, see the full article in the July 2012 Turnaround Letter.