Many struggling companies tapped robust debt markets this year to stave off final reckonings. But a flurry of recent bankruptcy filings suggests the corporate carnage set off by the financial crisis isn't done yet.
The U.S. default rate, which peaked at nearly 15% in November 2009, according to Moody's Investors Service, has since fallen below 4%. Credit markets are coming back, helping finance firms that seemed on the brink just 12 months ago. But many of these companies remain saddled with too much debt.
Despite welcoming credit markets, smaller companies remain constrained, unable to tap new financing as easily as large corporations. These firms in some cases are more reliant on banks or other financial institutions to stay alive, a dependency that can prove difficult amid current market conditions.
One looming question: Will interest rates remain low enough so that credit markets remain open, allowing companies to continue to refinance and avoid restructuring?
November brought a number of new Chapter 11 filings, including studio Metro-Goldwyn-Mayer Inc., Yellow Pages publisher Local Insight Media Holdings Inc. and steakhouse owner CB Holding Corp.
Discount-apparel retailer Loehmann's Holdings Inc. and National Enquirer publisher American Media Inc. filed for bankruptcy protection. Vertis Holdings Inc., a direct-mail advertising and printing company, also sought Chapter 11 protection for the second time in two years.More Here..