US corporate bankruptcies down

BY Richard Summerfield               

According to a report from BankruptcyData.Com, a division of New Generation Research, the number of firms falling down the slippery slope to bankruptcy in the US has dwindled over the last two quarters.

Business bankruptcies in the first half of 2015 were 19.2 percent lower than the first six months of last year and  68 percent lower than the first six months of 2010.

Despite the trend, public companies are still struggling. The report indicates that the number of Chapter 11 filings by public companies in H1 2015 reached its highest midyear level since 2011, and the total assets of companies entering bankruptcy, with the exception of financial companies, are at their highest levels since 2009. Furthermore, the 10 non-financial Chapter 11 filings involving assets above $1bn so far in 2015 is the highest at this point in the year since 2009.

Unsurprisingly, SMEs accounted for the majority of bankruptcy filings in the first half of the year, although the number of small companies encountering financial difficulty has begun to trend downwards. Seventy-six percent of all business bankruptcies recorded in the first half of 2015 were filed for by companies with $2.5m or less in gross sales revenue; though this figure is still high, it compares favourably with 2013 and 2014 which respectively saw 81 percent and 87 percent of bankruptcy filings stemming for smaller companies .

The bankruptcy filing of Caesars Entertainment, the largest unit of Casino giant Caesars Entertainment Corp, was the largest Chapter 11 filing of the first half of 2015. The company entered bankruptcy protection in January listing assets of $1.5bn.

The service industry was responsible for the most bankruptcy filings in Q2, at 31 percent. However, this figure is down from Q2 2014 and Q2 2013, which saw the service industry generate 37 percent and 43 percent of filings.

Report: Q2 2015 Business Bankruptcy Filing Report

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