Bankruptcy

Climate change turns US utilities grimly exciting

31 Aug 2023

Hawaii’s biggest electricity provider is at risk of bankruptcy after wildfires destroyed a town. Increased capital expenditure can mitigate, but not eliminate, damage from storms and heat. Little wonder investors are slowly waking up to the dangers posed by litigious customers.

Opioids expose unhealthy bankruptcy addictions

11 Aug 2023

Mallinckrodt may file for Chapter 11 again, wiping out most of a $1.7 bln settlement over the painkillers. The insolvency also shielded executives from lawsuits, just as the Sacklers want to do. Such legal protections and undercapitalized restructurings discredit the process.

WeWork multitasked when it had just one job

9 Aug 2023

The office subletter conceded it might collapse, just months after a debt-for-equity recapitalization and four years since a funding round valued it at $47 bln. Mismanagement, hype and debt-fueled growth are to blame. Rival IWG suggests the business model works if kept in check.

India’s airline turbulence will be felt abroad

17 May 2023

Go is the second carrier to go bust since 2019 despite a booming $12 bln industry. Blame price wars and debt-fuelled expansion. The airline’s legal battle with foreign lessors like Sumitomo will be messy too. It will raise the costs on efforts to turn India into an aviation hub.

KKR’s $10 bln medical deal overlooked risk factors

10 May 2023

Since the 2018 buyout that larded Envision Healthcare with debt, it has struggled with Covid-19, hypertension induced by feisty insurers and rehab on its billing practices. Bankruptcy is now the prescription. It’s a reminder to beware combining operational and financial leverage.

First Republic’s rescue cements ‘too big to fail’

4 May 2023

JPMorgan rode to the rescue of the mid-sized lender, which recently became the latest US bank to keel over. In this Viewsroom podcast, Breakingviews columnists discuss the impact of lending giants bulking up further, and whether that itself stores up future risks.

Capital Calls: Bridal bankruptcy

18 Apr 2023

Concise views on global finance: David’s Bridal, which dresses one in four American brides, has filed for Chapter 11 bankruptcy for the second time in five years. Trends that push women to spend more on themselves suggest the chain would have better luck with bachelorettes.

Richard Branson advances the science of SPAC holes

4 Apr 2023

Virgin Orbit, one of more than a dozen space-related outfits to go public since 2019, mostly by way of shell companies, has declared bankruptcy. On average, these stocks have lost 75% of their market value. Rapid incineration of capital means plenty of others will flame out too.

SVB’s collapse casts long and global shadow

16 Mar 2023

The US bank’s failure sparked a mass selloff in bank stocks. In this Viewsroom podcast, Breakingviews columnists debate the causes of investor jitters, the long-term implications of intervention by governments and regulators, and the latest concerns about Credit Suisse.

SVB proves even smaller banks are too big to fail

15 Mar 2023

It’s 15 years since Bear Stearns showed large-scale failure is contagious. Yet US regulators still struggled with the collapse of a group half its size. If buyers cannot come to the rescue and depositors won’t bear any risk, then even lesser groups will need more protection.

European banks priced for profit dip, not crisis

14 Mar 2023

Lenders’ shares have plunged since Silicon Valley Bank failed, but only to January’s levels. Senior bankers like Lloyds CEO Charlie Nunn see no evidence of a US-style deposit rush in Britain. For investors, the fear is that interest rates don’t rise as far, crimping returns.

Bank-run defences could use some reinforcements

13 Mar 2023

Silicon Valley Bank wasn’t subject to requirements that compel most lenders to hold enough liquid assets to meet possible outflows. But the speed with which corporate clients pulled their money suggests those rules need tweaking. Doing nothing raises the risk of a bigger repeat.

Meme investors go to bed, take a bath

7 Feb 2023

Near-bankrupt U.S. retailer Bed Bath & Beyond will gain slightly less cash than it burned last quarter by issuing shares after an irrational stock rally. The structure – $225 mln now and up to $800 mln later – isn’t that clean. And delaying the inevitable has an opportunity cost.

Capital Calls: British jolt

17 Jan 2023

Concise views on global finance: The collapse of UK battery group Britishvolt leaves a gaping hole in the country’s auto manufacturing sector.

Tycoons school banks in Indian retailer debt mess

25 Nov 2022

Thirteen suitors are queuing up to buy Future Retail out of bankruptcy, boding well for creditors’ prospects of resolving $3 bln of claims. Despite new rules, the saga has benefited Mukesh Ambani’s Reliance at the expense of lenders. Big business still has the upper hand.

FTX collapse consigns crypto to fringes of finance

24 Nov 2022

Sam Bankman-Fried’s failed crypto exchange is a huge blow to the ailing sector. In this Viewsroom podcast, Breakingviews columnists discuss how firewalls helped protect banks, how the saga will embolden regulators, and what the future looks like for digital currencies.

FTX affords a turning point in venture governance

17 Nov 2022

New CEO John Ray uncovered patchy balance sheets and signs of looting at the bust crypto exchange. What he calls “a complete failure of corporate controls” means users may not get repaid. Formidable backers like Temasek and Sequoia would be crazy to make the same mistakes again.

Zombie firms shuffle away from reckoning

14 Nov 2022

Carvana, Peloton and others assumed capital would always be plentiful. It’s not, and they continue to burn cash with business models that need work. Yet these larger firms, on average, have two years of money left. With cost cutting, many may survive, if not thrive.

Sam Bankman-Fried did financial system a favour

14 Nov 2022

The curly-haired cryptocurrency kingpin pushed regulators and politicians to legitimise assets like bitcoin. A few more years and his now-bankrupt exchange FTX would have burrowed deeper into mainstream finance, amplifying the damage. His downfall sends the process into reverse.

Cinemas’ debt horror show compels a director’s cut

25 Aug 2022

Regal owner Cineworld is prepping to file for bankruptcy. Punters are slowly returning to theatres, but studios are taking their time to release “Top Gun”-style blockbusters. With less income and rising wage costs there need to be fewer screens, and fewer operators.