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Third quarter bankruptcies leap by 75% YoY – 3Q23 North America Restructuring Insights Report

3Q23 North America Insights Report

 

Debtwire’s Quarterly Restructuring Insights report provides a high-level overview of the most recent bankruptcy filings, tracking filing strategies, venue choices, frequent advisors and debtor-in-possession (DIP) financing packages, among other data.

This edition examines US bankruptcy cases commenced in 3Q23. Despite August being the busiest month of the year with 35 new cases, the bankruptcy market saw a 4% decline in activity in 3Q23, with 77 new cases filed, as compared to 2Q23, which had 80 cases commenced. YoY, however, the number of cases commenced in 3Q23 were 75% more than 3Q22, which saw 44 cases initiated. Eleven cases filed this quarter were Chapter 15s.

The 3Q23 bankruptcy filings included several significant cases from different industries, including Mallinckrodt plc, Yellow Corp, SmileDirectClub, and Sunac China Holdings.

Filing strategy: Of the 77 cases filed in 3Q23, 48 were free fall bankruptcies (62%) while 17 were filed using pre-filing sale process (22%).

Venue: Delaware was the most active court with 29 cases (38%), while the Southern District of Texas was second with 12 cases (16%).

Sectors: Healthcare was the most active sector this month with 14 (18%) cases, followed by real estate with 12 (16%) and financial services with 11 (14%) cases.

DIPs: There were 64 Chapter 11 cases in 3Q23 of which 35 (55%) used DIP financing facilities to fund their bankruptcies. Yellow Corp’s USD 644m DIP was by far the largest of the quarter.

Advisors: McDermott and Paul Weiss were the most active legal advisors with six mandates a piece. On the financial advisor/investment banker side, FTI Consulting was the most active with nine mandates.

Management plans: The highest KEIP of USD 5.91m was approved for Amyris and highest KERP of USD 5.1m was approved for Western Global Airlines.

Click here to explore the entire Restructuring Database (access required).