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After a long dry spell with few significant bankruptcies, we’ve seen four large public companies file for Chapter 11 protection in the last three weeks: MF Global Holdings (total assets of $40.5 billion) on October 31, Syms (assets of $271million) on November 2, Dynegy Holdings (assets of $9.9 billion) on November 7 and General Maritime (assets of $1.8 billion) on November 17. Taken together, these four filings represent more assets going into Chapter 11 than all of the other bankruptcies over the preceding 19+ months combined.
Each of these bankruptcies has its own unique causes, and there are few, if any, common threads among them. Nonetheless, these four high profile Chapter 11 cases could be significant just because they have gotten people thinking about bankruptcy again. We’ve been through a nearly two-year period when it’s almost been hard for large companies to fail because so much liquidity has been available from Wall Street. These four big cases serve to remind both debtors and creditors that bankruptcy is an option--and often the preferred option. As a result, we could see more significant Chapter 11 filings in the months ahead.
Moreover, each of these recent bankruptcies has its own potential investment opportunities and pitfalls. We plan to discuss the investment considerations in these four bankruptcies in the upcoming December issue.