Firms Seek Experts in Bankruptcy and Restructuring
General Motors reported that top executives sold all their shares in the automaker, according to Reuters. The move is further evidence that GM will likely file for bankruptcy. Reuters states that Vice Chairman Bob Lutz sold $130,989 worth of GM stock. That sale of the 81,360 shares cleared out all of Lutz’s direct holdings of GM stock, according to his filing with the SEC. Five other executives, including Lutz’s successor, Thomas Stephens, also sold all of their GM stock holdings, according to the filings. The sales were made during a trading window when such transactions are allowed, following the company’s quarterly earnings report. It may be the last time for executives to do so before the government’s June 1st deadline for GM to restructure or file for bankruptcy.
Meanwhile, Cincinnati manufacturer Sencorp recently joined the long list of businesses filing for bankruptcy. The company filed for Chapter 11 on May 8th with the U.S. Bankruptcy Court for the Southern District of Ohio. Sencorp will sell its assets to equity firm Wynnchurch Capital Ltd., as part of a Chapter 11 bankruptcy proceeding, reports Business Courier of Cincinnati.
Sencorp’s bankruptcy filing is just one of a recent slew of corporate bankruptcies. In fact, business bankruptcies recorded the sharpest percentage increase in 2008 with 43,546 business filings - a staggering 54% jump from the 28,322 filings in 2007 (the highest in a decade), according to the American Bankruptcy Institute (ABI). Looking ahead, experts predict the trend is likely to continue. According to ABI Executive Director Samuel J. Gerdano, “We expect filings to reach 1.4 million or even more this year. A recent ABI Quick Poll of ABI members (nearly 11,700 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals) and non-members also reveals that the majority of respondents, 65%, believe that overall bankruptcies will increase by at least 35% this year over the nearly 1.1 million cases filed in 2008.
Moreover, bankruptcy-related defaults have become the second leading cause for defaults this year, according to the WSJ. The report states that corporate defaults approached record levels in April after ten global corporate issuers - including auto maker Chrysler LLC – recently defaulted. April’s tally now stands at 40 and the total so far this year has hit 102, reports the WSJ, citing data from Standard & Poor’s. The report states, “Defaults have been surging for more than a year as the economy turned south and the credit crunch made refinancing debt much more difficult,” The WSJ notes S&P also expects the global corporate default rate to jump to 14.3% by next March.
Amid the trend, it may come as no surprise that businesses plan to spend more of their legal budgets on bankruptcy and restructuring issues. BTI Consulting Group recently conducted 370 interviews with corporate counsel at Fortune 1000 companies. The results of BTI’s research show that spending for bankruptcy assistance will rise by 2.6%. Michael Rynowecer, President of BTI Consulting, acknowledges however, the bankruptcy figure could end up going much higher as bankruptcy becomes a reality for a growing number of businesses.
Now, as the number of Chapter 11 filings and corporate defaults continues to grow, executive search firm, A.E. Feldman, is already seeing a surge in demand for candidates with expertise in bankruptcy, crisis management, restructuring and valuation. A.E. Feldman’s CEO, Carol Schwam, says, “Accounting firms and other specialty advisory firms are looking for experts who can consult businesses on bankruptcy and restructuring.” Job opportunities exist for professionals with CPA, CIRA, CTP or CFA certifications.
Are you working in bankruptcy or restructuring? If you want to grow your career or discuss your firm’s talent needs, contact A.E. Feldman’s President, Mitch Feldman today.
