Corporate restructuring professionals -- who provide non-legal services in corporate restructuring, turnaround management, and bankruptcy reorganization to mid- and large-size companies -- can be an amusing and optimistic bunch. A survey of about 100 restructuring professionals was just released, checking in on their sense of where the economy is headed for big corporations in the year ahead. Amusingly, they were also asked to choose a movie that reflected their outlook for the year.
The good news for big business is that the restructuring professionals said they don't expect 2013 to see much of an increase in large Chapter 11 or Chapter 15 (international debtor) bankruptcies. Around 44 percent of those surveyed predicted there would be between six and 10 bankruptcies involving $1 billion or more in assets, while 36 percent predicted 2013 will bring 11 to 15.
Either of those predictions would almost certainly mean an improvement over 2012, or at least a continuation of the current status quo. There were a total of 14 $1 billion Chapter 11s or 15s last year. The number of these giant bankruptcies reached its peak at 19 in 2009, at the height of the Great Recession.
This year, the big bankruptcy in-group projected retail companies, media and publishing organizations, energy firms and healthcare businesses as industries that could see trouble. The retail industry was in first or second place among industries of concern for the last three years. This is third year for this particular survey, which was done through a major business law firm.
Another bit of good news, which may have more of an impact on the rest of us, is that the homebuilding and commercial real estate industries are no longer considered troubled. Recent news has generally been more positive for the housing market, including a recent report that put the existing supply of homes for sale at a 13-year low, which is great news for homeowners.
So, what was the winner of the movie that restructuring professionals chose as reflecting their 2013 outlook? "Life of Pi." The group decided to go with a different theme for the year, however: "Above All, Don't Lose Hope."
Source: Thomson Reuters News & Insight, "Little increase seen in big bankruptcies in 2013," Tom Hals, Feb. 21, 2013