Talent in Demand as Bankruptcies Soar
Halfway through 2008, Billion-dollar bankruptcies have already hit a five-year high, reports Reuters, citing research from bankruptcy filing tracker BankruptcyData.com. The report states that a total of seven U.S. companies with more than a billion dollars in assets have filed for bankruptcy protection so far this year. Reuters quotes George Putnam of New Generation Research, which publishes BankruptcyData.com as saying, “We seem to be in the midst of a ‘perfect storm’ leading to more bankruptcies: high levels of debt, high energy and raw materials costs and weakness in the U.S. economy.” In fact, Putnam forecast bankruptcies could peak as early as the middle of 2009 or continue rising well into 2010.
Overall, as consumers struggle under the burden of rising household debt, growing mortgage problems and rising energy prices bankruptcy filings in the U.S. were up 33% in June compared to a year ago, according to RiskCenter. Moreover, bankruptcies are currently on track to surpass one million in a year for the first time since bankruptcy laws were tightened in October 2005. Companies filing for Chapter 11 reorganization also rose at an annual rate of 34% above the 6,241 filings in 2007.
Mitch Feldman, President of executive search firm, A.E. Feldman, says the trend is creating opportunities for candidates with expertise in underwriting, restructuring, valuation and loan workouts. Law firms around the country are also gearing up for the increase in bankruptcy filings. Many have already begun expanding their ranks, hiring bankruptcy attorneys and restructuring specialists. A.E. Feldman says legal jobs are opening up for candidates with excellent academic credentials and a proven track record.
Topping the list of U.S. companies with more than a billion dollars in assets that have filed for bankruptcy protection so far this year is Fremont General Corp (one of the largest U.S. providers of subprime mortgages before regulators ordered it to stop making the loans), according to Reuters, citing research from bankruptcy filing tracker BankruptcyData.com. The report says Fremont filed for Chapter 11 bankruptcy protection back in May – it was the largest filing with $13 billion in pre-petition assets. Coming in second was energy trader, SemGroup LP, with $6 billion in pre-petition assets.
Looking ahead, the amount of U.S. investment-grade bonds trading at distressed levels has risen close to an all-time high. According to some expects, this may be a warning sign that a wave of mega-bankruptcies is likely on the way, according to Reuters. The report explains that bonds are considered distressed when their yields, which move in the opposite direction of prices, exceed 1,000 basis points over those on U.S. Treasuries. Reuters quotes Christopher Garman (former head of high-yield strategy at Merrill Lynch & Co Inc.) from the high-yield research publication Leverage World as stating, “The distressed trading levels in both investment-grade and speculative-rated bonds “suggests that we will see record-sized bankruptcies by volume into 2009-2010.”
Law firms around the country are gearing up for the increase in bankruptcy filings. Many have already begun expanding their ranks, hiring bankruptcy attorneys and restructuring specialists.
Most recently, law firm Crowell & Moring (a firm which has been involved in some of the nation’s biggest bankruptcy and restructuring cases) announced it is expanding its distressed group. The firm says it added three financial services and bankruptcy attorneys in order to deepen its ability to handle the full range of debt restructuring and corporate reorganization matters. Crowell & Moring says its Financial Services Group has seen significant growth and is among its fastest growing practices.
“The number of nationwide bankruptcy corporate filings doubled from May to June. The credit crisis means that our clients will have an increased need for sophisticated restructuring counsel over the next several years. Our new bankruptcy attorneys enhance our ability to meet the full range of client needs on the most complex matters,” says William M. O’Connor, chair of Crowell & Moring’s Financial Services Group.
To learn more about these issues or inquire about existing and future job opportunities in restructuring, valuation and loan workouts as well as bankruptcy law, the lines of communication are open. Contact A.E. Feldman’s President, Mitch Feldman, and the firm’s expert recruiting team here.
