Executive Summary

To read the full report, please click here: Trends in Large Corporate Bankruptcy and Financial Distress

The COVID-19 pandemic triggered a spike in large corporate bankruptcy filings not seen since the global financial crisis. The number of large corporate bankruptcies in 2020 was second only to 2009’s peak, and bankruptcy filings by companies with more than $1 billion in assets were the highest since 2005.

As the economic recovery began to take hold, however, bankruptcies returned to lower levels in the first half of 2021. This pattern was consistent across most industries.

This report examines trends in Chapter 7 and Chapter 11 bankruptcy filings between January 2005 and June 2021. Unless specified otherwise, the bankruptcies analyzed in this report involve public and private companies with over $100 million in assets.[1]

• A total of 155 companies filed for bankruptcy in 2020. This is the second-highest annual number of bankruptcy filings since 2005, only behind the 161 bankruptcy filings in 2009. (page 2)

• Of the 155 bankruptcy filings in 2020, 104 occurred in Q2 and Q3 2020. In contrast, there were only 17 such bankruptcies in Q4 2020. (page 3)

• In 1H 2021, 43 companies filed for bankruptcy, less than half of the number of bankruptcies (89) filed in 1H 2020, but slightly above the 2005–2020 annual average of 79 bankruptcy filings (i.e., 39 per half year). (page 3)

• Bankruptcy filings by private companies constituted 79% of all bankruptcies in 1H 2021, substantially higher than the annual average of 37% for 2005–2020.

• There were 60 “mega bankruptcies” (i.e., those filed by companies with over $1 billion in reported assets) in 2020. More than half (31) of the mega bankruptcies in 2020 were filed in Q2 2020. (page 2)

• Only nine Chapter 11 mega bankruptcies were filed in 1H 2021. This is considerably lower than the 2020 level, although comparable to the 2005–2020 half-year average of 11. Of the mega bankruptcies in 1H 2021, four were filed by companies in the real estate industry. (page 3)

• The largest bankruptcies in 2020 and 1H 2021 were filed by The Hertz Corporation with $25.84 billion in assets at the time of filing, and Seadrill Limited with $7.29 billion in assets at the time of filing, respectively. (page 6)

​​Figure 1: Key Trends in Bankruptcy Filings

2005–1H 2021

Source: BankruptcyData

Note: Only Chapter 7 and Chapter 11 bankruptcy filings by companies (both public and private) with over $100 million in reported assets are included. For companies where exact asset values are not known, the lower bound of the estimated range is used. Asset values are not adjusted for inflation. Mega bankruptcies are defined as those for companies with over $1 billion in reported assets at the time of their bankruptcy filing.

Bankruptcy Filings

Number of Bankruptcies

• Bankruptcy filings in 2020 were at historically high levels, comparable to the annual rate of filings observed during the global financial crisis. A total of 155 companies filed for Chapter 7 or Chapter 11 bankruptcy in 2020, compared to 128 and 161 bankruptcy filings in 2008 and 2009, respectively.

155: Number of bankruptcy filings in 2020 by companies with over $100 million in assets.

• There were 60 mega bankruptcies in 2020, the highest annual number over the 2005–2020 period. The second-highest number of mega bankruptcies (57) was recorded in 2009.

• There were 14, 12, and 8 mega bankruptcies filed in May, June, and July 2020. The previous monthly record during the 2005–2020 period was eight mega bankruptcies in May 2009.

• Although severe, the spike in bankruptcy filings driven by the COVID-19 pandemic was shorter lived than during the global financial crisis. Following the onset of the pandemic, the number of monthly bankruptcy filings was higher than the 2005–2020 average (6.5) for six consecutive months as compared to 14 consecutive months after Lehman Brothers filed for bankruptcy.

Figure 2: Monthly Chapter 7 and Chapter 11 Bankruptcy Filings

2005–1H 2021

Source: BankruptcyData

Note: Only Chapter 7 and Chapter 11 bankruptcy filings by companies (both public and private) with over $100 million in assets are included. For companies where exact asset values are not known, the lower bound of the estimated range is used. Asset values are not adjusted for inflation. Lehman Brothers filed for bankruptcy on September 15, 2008. The World Health Organization (WHO) declared COVID-19 a pandemic on March 11, 2020. Years are labeled at January 1.

• Pandemic-driven bankruptcies peaked in July 2020 when 24 companies filed for bankruptcy. This is the second-highest number of bankruptcy filings in a single month since 2005, behind only the 25 bankruptcy filings in March 2009.

43: Number of bankruptcy filings in 1H 2021 by companies with over $100 million in assets.

• Starting in October 2020, monthly bankruptcy filings returned to levels more consistent with historical averages.

• In 1H 2021, 43 companies filed for bankruptcy, compared to 89 in 1H 2020 and 49 in 1H 2019.

• Nine of the bankruptcies in 1H 2021 were mega bankruptcies, compared to 37 in 1H 2020 and 12 in 1H 2019.

• All bankruptcies in 1H 2021 were filed under Chapter 11 of the U.S. Bankruptcy Code.

Figure 3: Monthly Chapter 7 and Chapter 11 Bankruptcy Filings (Recent Trends)

2020–1H 2021

Source: BankruptcyData

Note: Only Chapter 7 and Chapter 11 bankruptcy filings by companies (both public and private) with over $100 million in assets are included. For companies where exact asset values are not known, the lower bound of the estimated range is used. Asset values are not adjusted for inflation. The World Health Organization (WHO) declared COVID-19 a pandemic on March 11, 2020.

Bankruptcies by Industry

• The Mining, Oil, and Gas industry experienced 44 bankruptcies in 2020. Bankruptcies in this industry have remained high since the 2014–2016 collapse in oil prices, but the rate of filings was significantly exacerbated by the further collapse of oil prices in March and April 2020.

• The Retail Trade industry had 31 bankruptcies in 2020, as the COVID-19 pandemic created a difficult environment for traditional retailers that faced lockdowns and reduced demand for in-store shopping.

• In 1H 2021, bankruptcy filings across most industries fell dramatically from their mid-2020 pandemic highs.

48%: Percentage of bankruptcies filed in 2020 by Mining, Oil, and Gas as well as Retail Trade companies.

• Since COVID-19 vaccine roll-outs in the U.S. began in December 2020, there have been signs of economic recovery in 1H 2021.[2] Oil prices rose by over 50%.[3] Consumers spent about $81 trillion, 8.8% and 3.4% higher than in 1H 2020 and 1H 2019, respectively.[4]

• Consistent with the recoveries in oil prices and consumer spending, bankruptcies in Mining, Oil, and Gas and Retail Trade combined fell from 75 in 2020 to 11 in 1H 2021.

• Bankruptcies also fell substantially in Transportation, Communications, and Utilities; Services; and Manufacturing—declining from a combined 66 in 2020 to 18 in 1H 2021.

• A notable exception to the trend of substantially declining bankruptcies was Finance, Insurance, and Real Estate, which had 10 bankruptcies in the full year of 2020 and nine in 1H 2021. Five of the nine bankruptcies were filed by real estate investors,[5] driven by the continued struggles of many traditional shopping centers and hotels in the wake of the pandemic.

Figure 4: Heat Map of Bankruptcies by Industry

2005-1H 2021

Source: BankruptcyData

Note: Only Chapter 7 and Chapter 11 bankruptcy filings by companies (both public and private) with over $100 million in assets are included. The Standard Industrial Classification (SIC) Industry Division “Mining” is labeled as “Mining, Oil, and Gas” to reflect the specific industries under the Industry Division. The SIC Industry Division “Transportation, Communications, Electric, Gas, and Sanitary Services” is labeled as “Transportation, Communications, and Utilities.” There are no bankruptcies in two SIC Industry Divisions—“Public Administration” and “Nonclassifiable.” These two SIC Industry Divisions are therefore not shown. For companies where exact asset values are not known, the lower bound of the estimated range is used. Asset values are not adjusted for inflation.

Largest Bankruptcies by Assets

• The largest bankruptcy filing by assets in 2020 was The Hertz Corporation. Hertz cited the “sudden and dramatic” impact of the COVID-19 pandemic on travel in its bankruptcy announcement.[6] It emerged from bankruptcy in June 2021.[7]

• Of the 20 largest bankruptcies by assets in 2020, 10 were filed by companies in the Mining, Oil, and Gas industry, which suffered from a sharp decline in oil prices in March 2020. The largest bankruptcy in this industry was Chesapeake Energy Corporation, which emerged from bankruptcy in February 2021 with a plan to shift its focus toward natural gas and away from crude oil.[8]

• Three large retailers, Ascena (parent company of Ann Taylor and Lane Bryant), J.C. Penney, and Neiman Marcus, filed for bankruptcy in 2020.

• In addition, a mall owner, CBL & Associates Properties, filed for bankruptcy in 2020 after many of its retail tenants failed (e.g., J.C. Penney and Ascena accounted for $18.5 million of its annual revenue). CBL had already been facing challenges due to the rise of online shopping, and the pandemic exacerbated this trend.[9]

• Bankruptcy filings in 1H 2021 were comparatively smaller than in 2020. The largest bankruptcy filing by assets in 1H 2021 was Seadrill Limited, an offshore drilling contractor that had struggled after the plunge in energy prices in 2020.[10] In May 2021, Seadrill Limited’s offshore drill owner and operator affiliate, Seadrill Partners, emerged from bankruptcy. In July 2021, Seadrill Limited filed its plan of reorganization with the bankruptcy court.[11]

• The second and third largest bankruptcies by assets in 1H 2021 were real estate investment trusts (REITs) Washington Prime Group and Hospitality Investors Trust, respectively. Washington Prime Group invests in shopping centers while Hospitality Investors Trust focuses on hotels.[12] Neither bankruptcy would have made the top 20 list of bankruptcies by assets in 2020.

88%: Decline in total assets of the 20 largest bankruptcies in 1H 2021 versus 2020.

• Knotel, the fifth-largest bankruptcy in 1H 2021, is a start-up flexible workspace operator that had previously reached “unicorn” status.[13] It raised Series C funding in August 2019 and was reportedly valued at $1.6 billion in March 2020.[14]

• Traditional retailers continued to face challenges in 1H 2021. Belk Inc., Christopher & Banks, and L’Occitane filed for bankruptcy in 1H 2021.

• Although there were only six bankruptcies by Mining, Oil, and Gas companies in 1H 2021, four of the six were among the 20 largest bankruptcies by assets in 1H 2021.

• The average size of the largest 20 bankruptcies in 1H 2021 was 88% smaller than in 2020. The average asset size of the top 20 largest bankruptcies was $10.3 billion and $1.2 billion for 2020 and 1H 2021, respectively.

• Of companies that filed for bankruptcy in 1H 2021, only Seadrill Limited (largest in 1H 2021) would have been large enough to make the top 20 list in 2020.

Figure 6: Largest 20 Recent Bankruptcies

2020 vs. 1H 2021

Source: BankruptcyData

Note: All companies in this table filed for Chapter 11 bankruptcy. The SIC Industry Division “Mining” is labeled as “Mining, Oil, and Gas” to reflect the specific industries under the Industry Division. The SIC Industry Division “Transportation, Communications, Electric, Gas, and Sanitary Services” is labeled as “Transportation, Communications, and Utilities.” For companies where exact asset values are not known, the lower bound of the estimated range is used. Asset values are not adjusted for inflation.

Research Sample

The research sample in this report uses BankruptcyData to identify Chapter 7 and Chapter 11 bankruptcies filed by public and private companies with over $100 million in assets.

The sample contains 1,299 such bankruptcies from January 1, 2005, through June 30, 2021.

BankruptcyData incorrectly records the asset size of Emergent Capital Inc. as $17.5 billion. This number is corrected to $175 million based on Emergent Capital Inc.’s bankruptcy petition form.

Mega bankruptcies are defined as Chapter 7 or Chapter 11 bankruptcies filed by companies with over $1 billion in reported assets. The sample contains 377 mega bankruptcies from
January 1, 2005, through June 30, 2021.

Asset values at the time of bankruptcy filings are used to measure bankruptcy size, due to the higher prevalence of missing information on liabilities in BankruptcyData. For companies with subsidiaries, separate bankruptcy filings by subsidiaries do not count toward the total number of bankruptcies.

Endnotes

1. This report relies on data obtained from BankruptcyData on July 6, 2021. It focuses on asset values at the time of bankruptcy filings, due to the higher prevalence of missing information on liabilities in BankruptcyData.

2. “Tracking America’s Recovery,” CNN Business, accessed 8/6/21.

3. U.S. Energy Information Administration, “Crude Oil Prices: West Texas Intermediate (WTI) – Cushing, Oklahoma (DCOILWTICO),”  Federal Reserve Bank of St. Louis, accessed 8/6/21.

4. “Consumer Spending Is Primed to Fuel Summer Growth,” Wall Street Journal, June 25, 2021; U.S. Bureau of Economic Analysis, “Real Personal Consumption Expenditures (PCEC96),” Federal Reserve Bank of St. Louis, accessed 8/6/21.

5. These five real estate companies are EHT US1 Inc., Knotel Inc., Plamex Investment LLC, Hospitality Investors Trust Inc., and Washington Prime Group Inc.

6. “Hertz Global Holdings Takes Action to Strengthen Capital Structure Following Impact of Global Coronavirus Crisis,” Press Release, May 22, 2020.

7. “Hertz Exits Chapter 11 as a Much Stronger Company,” Press Release, June 30, 2021.

8. “Chesapeake Energy Emerges from Bankruptcy and Shifts Back to Natural Gas,” Reuters, February 9, 2021.

9. “US Mall Owner CBL Files for Bankruptcy,” Financial Times, November 2, 2020.

10. “Restructuring,” Seadrill.com, accessed 8/19/21.

11. “Seadrill Limited (SDRL) – Agreement with Stakeholders to Raise $350 Million and Reduce Liabilities by Approximately $5 Billion,” Press Release, July 24, 2021

12. “Who We Are,” Washington Prime Group, accessed 8/16/21; “Investment Strategy,” Hospitality Investors Trust, accessed 8/16/21.

13. The term “unicorn” refers to a start-up company that is valued at over $1 billion.

14. “A Look at How Proptech Startup Knotel Went from a $1.6B Valuation to Filing for Bankruptcy,” TechCrunch, February 5, 2021.