Contact: John
Hartgen
Michelle Jeffers
(703) 739-0800
(415) 439-6666
color='#0000ff'>jhartgen@abiworld.org
w:st='on'>michelle.jeffers@dowjones.com
DOW
JONES DAILY BANKRUPTCY
REVIEW AND AMERICAN BANKRUPTCY INSTITUTE JOIN
FORCES TO RESEARCH CORPORATE RESTRUCTURING
New Research
Report Assesses Next Wave of Corporate Restructurings, According to
Daily Bankruptcy Review’s “New Trend Watch”
Publication
size='3'>November 8, 2006, Alexandria, Va.
size='3'>—Bankruptcy professionals are readying for the next wave
of corporate restructurings, which may arrive as early as six months
from now, according to the findings of a joint research effort by Dow
Jones & Company’s
size='3'>Daily Bankruptcy Review and the
American Bankruptcy Institute. The research—assessing the timing,
causes and targets of this restructuring wave—was released this
week in the first edition of “Trend Watch,”
face='Times New Roman' size='3'>Daily Bankruptcy Review
size='3'>’s newly launched white paper publication, sponsored by
Jefferies.
According to the research
report, which included a joint survey of 90 restructuring professionals,
the majority of respondents (71 percent) believe that the next big wave
of corporate restructurings will hit within the next six to 18 months.
Eleven percent of the survey respondents see the next wave of corporate
bankruptcies taking place within the next six months, while 19 percent
figure that the trend will take place 18 months to three years from
now.
“What the report
shows is that bankruptcy professionals are confident that high levels of
borrowing will eventually have repercussions, as sure as night follows
day,” said Nick Elliott, managing editor of the
face='Times New Roman' size='3'>Daily Bankruptcy Review
size='3'>. “That’s despite default rates remaining very low
and forecasts of a rise in defaults yet to
materialize.”
size='3'>Daily Bankruptcy Review’s
“Trend Watch” is only available to subscribers of the daily
e-newsletter and members of the American Bankruptcy Institute. In
addition to a complete analysis and charts on the research
survey’s findings, this first edition also contains a profile of
the Peter J. Solomon Company Watch list of publicly traded companies,
brief profiles of Standard & Poor’s “weak links”
companies and comparisons on the default rate projections of different
forecasters.
According to the research
report, of the industries most likely to be affected by the next wave of
corporate restructurings, 80 percent of respondents thought that the
real estate/construction industry was “very” or
“extremely” vulnerable to an economic downturn, while more
than two-thirds thought that retail would be similarly affected. Other
industries seen as very or extremely vulnerable by survey respondents
included airlines (67 percent), manufacturing (63 percent) and
transportation (49 percent).
Forty-eight percent of the
respondents singled out interest rates as the most likely trigger for
the next surge in restructurings, with falling home prices (15 percent),
higher commodity prices (13 percent), global competition (7 percent) and
a bear market for stocks (5 percent) also contributing to the
wave.
With regard to the tools that
professionals are using to predict whether a company might file for
bankruptcy, 54 percent of respondents said that they used operating cash
flow as the primary predictor for gauging companies under financial
duress. Other tools used by professionals to predict whether a company
will undergo a corporate restructuring or file for bankruptcy include
the debt-to-EBITDA (earnings before interest, taxes, depreciation and
amortization) ratio (49 percent) and bank loan prices (38
percent).
The research report survey was
conducted during July. Attorneys accounted for the majority of
participants (61 percent), with the balance being distressed-debt
investors (15 percent), financial advisors/investment bankers (7
percent) and lenders (5 percent).
Journalists who would
like a copy of the Daily
Bankruptcy Review/American Bankruptcy
Institute joint research survey may contact Michelle Jeffers at (415)
439-6666 or
(703) 739-0800.
###
ABI is the largest
multi-disciplinary, nonpartisan organization dedicated to research and
education on matters related to insolvency. ABI was founded in 1982 to
provide Congress and the public with unbiased analysis of bankruptcy
issues. The ABI membership includes more than 11,500 attorneys,
accountants, bankers, judges, professors, lenders, turnaround
specialists and other bankruptcy professionals, providing a forum for
the exchange of ideas and information. For additional information on
ABI, visit www.abiworld.org. For additional conference information,
visit
face='Times New Roman' color='#0000ff'
size='3'>http://www.abiworld.org/conferences.html
face='Times New Roman' size='3'>.
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