Already, companies large and small are succumbing to the effects of the coronavirus. They include household names like Hertz and J. Crew and comparatively anonymous energy companies like Diamond Offshore Drilling and Whiting Petroleum.
And the wave of bankruptcies is going to get bigger, The New York Times reports.
Edward I. Altman, the creator of the Z score, a widely used method of predicting business failures, estimates that this year will easily set a record for so-called mega bankruptcies—filings by companies with $1 billion or more in debt. And he expects the number of merely large bankruptcies—at least $100 million—to challenge the record set the year after the 2008 economic crisis.
Even a meaningful rebound in economic activity over the coming months won’t stop it, says Altman, the Max L. Heine professor of finance, emeritus, at New York University’s Stern School of Business. “The really hurting companies are too far gone to be saved,” he says.
Many are teetering on the edge. Chesapeake Energy, once the second-largest natural gas company in the country, is wrestling with about $9 billion in debt. Tailored Brands—the parent of Men’s Wearhouse, Jos. A. Bank and K&G—recently disclosed that it, too, might have to file for bankruptcy protection. So did Weatherford International, an oil field services company that emerged from bankruptcy only in December. Read the full story.