The pace of U.S. corporate bankruptcies quickened in early March from the previous month, even as faster COVID-19 vaccine rollout and government stimulus is brightening the outlook for many industries.
From March 1-14, 31 companies entered bankruptcy proceedings, outpacing the 17 filings in the first two weeks of February and nearing the 35 bankruptcies recorded during that entire month, according to S&P Global Market Intelligence data.
So far in 2021, the bankruptcy tally of 112 as of March 14 trails the year-ago figure of 129. Filings in 2020 hit a 10-year high, while the year-to-date total in 2021 trails the comparable figure in all but three of the prior 10 years — 2014, 2015 and 2018.
The new round of filings comes alongside lower odds of default for U.S. companies across industries, and higher expectations for an economic recovery. The business models of consumer companies, in particular, are expected to get a lift from a combination of the economy reopening and the latest round of stimulus payments.
Social distancing measures have caused restaurant sales to plummet, but food retail sales have increased, Diya Iyer, an S&P Global Ratings credit analyst, said in a March 16 report. Some of the pandemic-driven changes in consumer dining habits will persist even as more people get vaccinated and lead to long-term market share gains for food-at-home companies, Iyer said.
"We expect that most companies in this sector will post sales increases again in 2021 despite the unusually strong 2020," Iyer said.
Denver-based HighPoint Resources Corp., a public oil and gas exploration and production company traded on the New York Stock Exchange, was one of the largest filings during early March. The company filed for Chapter 11 bankruptcy protection with a prepackaged reorganization plan that implements a merger deal with Bonanza Creek Energy Inc.
The merger and bankruptcy plans were announced in November 2020 with the deal valued at $376 million at the time. A spokesperson for HighPoint declined to comment beyond previously released statements. Bonanza did not respond to a request for comment.
The filing prompted S&P Global Ratings on March 16 to lower its issuer credit rating on HighPoint to D from CC and downgrade all of its issue-level ratings on HighPoint's debt to D. Ratings expects to withdraw all of its ratings for HighPoint after 30 days.
HighPoint's bankruptcy is among five in the energy sector announced in 2021 as of March 14. Companies within consumer discretionary industries recorded 20 filings so far in 2021, the most of any sector.
Filings in the consumer discretionary sector in early March include hotel operator FMT SJ LLC and textile importer and distributor Matrix International Textile, Inc.
The pandemic hurt business for travel-related industries. Meanwhile, Importers of all kinds are facing elevated global container shipping rates following an initial spike in 2020, according to a March 11 report by Panjiva, which is a business line of S&P Global Market Intelligence, a division of S&P Global Inc. Shipping rates rose March 5 to $4,570 per 40-foot equivalent, or FEU, up from $1,040 per FEU June 1, 2020, according to a Panjiva analysis of S&P Global Platts data.
The two weeks to March 14 also included the high-profile Chapter 11 bankruptcy filing by Alamo Drafthouse Cinemas Holdings LLC. The theater chain's founder Tim League on March 3 signed an agreement with Altamont Capital Partners, LLC and Fortress Investment Group LLC to purchase most of Alamo Drafthouse's assets. Alamo Drafthouse, Altamont, Fortress and League did not respond to requests for comment.
Editor's note: This Data Dispatch is updated on a biweekly basis and the last edition was published March 3. Market Intelligence may remove companies from this list if it discovers that their total assets and liabilities do not meet the threshold requirement for inclusion. Click here to download the charts.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.