Monthly PE-Backed Bankruptcy List: The Mega-buyouts Are Beginning To Crack

Just four additional sponsor-owned companies filed for Chapter 11 bankruptcy protection in August, bringing the total number to 59. That’s ten more filings than all of 2008.

Notably, the four latest filings are among the year’s largest.

We knew the bankruptcies would increase this year, but we weren’t sure if they’d creep into mega-buyout territory, since the debt on many of the largest deals (struck in 2006 and 2007) won’t mature until 2013 or later.

This month shows that that’s not the case. Four of the last PE-backed six bankruptcies were from companies with deal values greater than $1 billion. Could this be a sign we’ll see more big deals fail?

The two latest filings are among the year’s largest and both in the print media sector. Ripplewood Holdings’ failed play for Reader’s Digest Association went bankrupt a week before Blackstone Group and Providence Equity Partners’ Freedom Communications crashed.

There may be more where that came from for Blackstone Group. The firm financed its investment in Freedom Communications with equity from Blackstone Communications Partners I, a 2000-vintage media-focused vehicle which has not had a successor. The fund had $2 billion in commitments. Blackstone wrote the fund down by 48% at the end of 2008. Given the general state of distress endured by Freedom’s public comps, I assume the company had been written down to zero by then already.

Download the full spreadsheet below. As usual, here is a note about the methodology:  Our data is only for control-sponsored deals that included at least one U.S. sponsor. As such, we exclude foreign-sponsored companies (like Arclin), VC-backed companies (like ProtoStar) and PIPEs (like BearingPoint). We do track minority PE-backed bankruptcies in the chart, but do not include them in the topline numbers.

PE-Backed Bankruptcies August 2009

View all bankruptcy-related posts at peHUB Fileroom.

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