Bankruptcy

China bank failure fires quiet warning shot

10 Aug 2020

Beijing will let Baoshang Bank go under in the first such insolvency since 2001. The liquidation of the lender, used as a piggy bank by an insurer, will raise credit costs for small peers, pushing more of them to the brink. It’s an overdue cleansing, but a risky time to do it.

Retail’s WeWork escape hatch is sealed shut

3 Aug 2020

Real estate used to be a valuable asset for troubled retailers: Lord & Taylor sold its flagship store to the office share startup. But a spate of bankrupt apparel chains shows the sector’s last ditch for value is on the fritz. It is bad news for the likes of Simon Property.

Merger tricks no match for rolling up the sleeves

3 Aug 2020

The parent of Men’s Wearhouse has filed for bankruptcy after Covid-19 halted in-person shopping and a need for suits. Just six years ago it was a Wall Street plaything, successfully pulling off a so-called Pac-Man defense. It’s a reminder M&A games are no match for good strategy.

UK insolvency shakeup stops at Chapter 10.5

23 Jul 2020

A fast-tracked new bankruptcy code gives Covid-hit firms, like Virgin Atlantic, precious breathing space. As with the U.S. Chapter 11, directors can get protection from creditors as they try to restructure. It’s better than the systems used by EU peers, but can still be improved.

Corona Capital: Expense accounts, Zoom’s new box

15 Jul 2020

Concise views on the pandemic’s corporate and financial fallout: Goldman Sachs’ earnings give an insight into pandemic-era client schmoozing, and virtual meeting facilitator Zoom tiptoes into the high-priced hardware market.

Fast food franchise model has burnt edges

1 Jul 2020

NPC International, the U.S.’s largest Pizza Hut franchisee, filed for bankruptcy. An LBO flip, heated competition, and higher labor costs left it larded with debt. Parent company Yum appears resilient. But its restructuring portends sizzling problems in the franchise model.

Bankrupt shale pioneer’s backers need new model

29 Jun 2020

Chesapeake enters Chapter 11 with funding to come out again. Supportive creditors may be right that there’s a future in U.S. fracking, which the firm helped develop. But making money was hard when borrowing and dealmaking were easy. It’ll be even tougher as climate risk bites.

PG&E’s $58 bln bankruptcy exit is no clean sheet

22 Jun 2020

America’s largest utility emerged from Chapter 11 for the second time with about $16 bln more debt, a torched reputation, continuing political demands, and reduced but not eliminated wildfire liabilities. PG&E is out of court, but not necessarily out of trouble.

Hertz shares may yet be roadworthy

18 Jun 2020

The bankrupt car-rental firm halted plans to sell stock after the SEC raised concerns. Equity is usually wiped out in Chapter 11. But if a re-emergent Hertz could rev its EBITDA up to, say, 60% of pre-pandemic levels, shareholders could stay along for the ride.

Wall Street underwriters get their day in the sun

16 Jun 2020

Investors are going bananas for new shares. Even bust rental-car firm Hertz can sell stock. Re-equitizing companies is bringing a bonanza of fees to global equity capital markets desks at investment banks. But the window is only open now thanks to central banks and governments.

Hertz throws equity wrench in bankruptcy melee

12 Jun 2020

The car-hire firm wants to raise up to $1 bln by selling shares to replace debt that usually finances a restructuring. It may pay off, but equity usually crashes into a wall in Chapter 11. The stock market’s irrational exuberance is letting Hertz test-drive an unusual vehicle.

Mall-to-retailer relationships will get creative

29 May 2020

Brookfield Asset Management launched a $5 bln fund to invest directly in retailers. It’s an effort to salvage some of the Canadian mall owner’s top customers. As Neiman Marcus and J.C. Penney march into bankruptcy, other real estate owners will rethink traditional rents, too.

Latin America puts new spin on airline distress

26 May 2020

The region’s largest carrier, Latam Airlines, has filed for bankruptcy protection weeks after rival Avianca did. It can’t bank on government bailouts and has hefty dollar liabilities, amplifying the shock of having to ground planes. The future looks a lot smaller.

Hertz is a study in financial comorbidities

26 May 2020

The car-hire company’s heavy debts crushed it when Covid-19 curtailed travel. Other businesses with overengineered balance sheets have similarly come unstuck. It’s not that Hertz could have seen this coming – but the system has quickly switched to favoring flexibility over risk.

Buyout barons will keep getting cake and eating it

18 May 2020

Private equity blowups like retailer J. Crew take on extra frisson in a crisis, because buyout firms themselves are benefiting from subsidized credit, low asset prices and tax loopholes. The cycle can continue while investors keep coming, and politicians have bigger fish to fry.

Hong Kong’s reeling companies need a quicker fix

7 May 2020

Local businesses have been battered by Covid-19 and months of protests, but the city still lacks a regime to give them breathing room while they nurse themselves back to health. A mooted Chapter 11-style system will take too long to implement, but other options are available.

Neiman’s squabble shows retailer valuation problem

27 Apr 2020

The Dallas-based department store is preparing to file for bankruptcy, hurt by $5 bln of debt and a pandemic that has halted shopping. Whether and how many high-end patrons return is a big unknown for anyone bailing them out. A deal offers the most value but least certainty.

U.S. Senate boss opens state-finance can of worms

23 Apr 2020

Mitch McConnell is resistant to giving states more help, especially for their pensions. He prefers letting them file for bankruptcy – currently not allowed. It’s political posturing, but just floating the idea could eventually backfire, including for his own state of Kentucky.

More regulation, less return for U.S. utilities

19 Mar 2020

A defensive sector looks less so amid the coronavirus pandemic. A sharp rise in unemployment will make regulators less willing to green-light rate increases. Yet the grid still needs heavy investment, virus or not. PG&E’s return from bankruptcy illustrates the dilemma.

U.S. virus bailouts require good instructions

11 Mar 2020

Donald Trump wants to help airlines weather the hit from Covid-19. Unlike cruise lines, also on his list, that makes sense. Some carriers, like Delta and United, may not need aid. But taxpayer rescues can work with the right structures. Breakingviews offers a bluffer’s guide.