The past 24 hours have seen a wave of seven US companies filing for Chapter 11 bankruptcy protection, including Vice Media and Monitronics International. These filings come as companies struggle to renegotiate debt accumulated during the era of low interest rates, with interest rate hikes making it more challenging for companies to refinance loans and bonds. In addition, higher rates have led to increased scrutiny from investors and creditors.
Vice Media, which was valued at $5.7 billion in 2017, secured a $450 million investment from private equity firm TPG. However, journalism has been an easy target for advertisers' cost-cutting plans in an uncertain economy, leading to the company's dramatic fall from its status as a media darling. The company has listed both assets and liabilities in the range of $500 million to $1 billion, and a deal has been struck to sell itself to creditors including Fortress Investment Group, Soros Fund Management, and Monroe Capital.
Monitronics had more than $1 billion in debt coming due in 2024, and had planned to start a Chapter 11 bankruptcy to help implement its restructuring. The company said it would cut its debt by $500 million under the pre-arranged and partially prepackaged plan.
Envision Healthcare, a medical staffing company backed by KKR, had been in talks about restructuring options after it skipped a bond coupon payment due in mid-April. The company had raised more than $1 billion in fresh cash just last year, but was struggling to make good on its debt obligations in the face of higher interest burdens and wage inflation. It has listed both assets and liabilities in the range of $1 billion to $10 billion.
Venator Materials had upcoming debt maturities, including a roughly $350 million first-lien term loan due in August 2024 and around $600 million of notes due in 2025. The company listed both assets and liabilities in the range of $1 billion to $10 billion.
Cox Operating, a closely held oil producer, had been attempting to reach an agreement with its creditors on reducing or deferring payments to avert filing for bankruptcy. The company has estimated liabilities and assets of $100 million to $500 million each.
Pharmaceutical company Athenex has reached an agreement with its lenders to move forward with an expedited sales process of its assets across its primary businesses, which is expected to conclude by July 1. The company has estimated liabilities of $100 to $500 million.
Fire protection systems manufacturer Kidde-Fenwal said it will seek options including a sale of the company as a going concern. The company has estimated liabilities in the range of $1 billion to $10 billion.
The recent wave of bankruptcies highlights the challenges faced by companies across all sectors, and the need for effective debt management strategies in an environment of higher interest rates.
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