The final list of 2008 LBO-backed bankruptcies has 49 Chapter 11s. Repeat offenders include our turnaround investing friends at Sun Capital and Cerberus and our non-turnaround investing friends at Catterton Partners, Carlyle Group, Thomas H. Lee Partners, and Madison Dearborn Partners.
The auto industry tops the list as worst-hit, claiming 11 of the Ch. 11’s. Tied with automotive is retail, with 11 more of the 11’s. Three of those are furniture retailers. Beyond that it’s a toss-up with transportation + airlines claiming six, three media properties, three consumer products vendors, and two restaurants.
Four of the companies have emerged from bankruptcy; several others have headed for Chapter 7 liquidation.
For the record, it’s nice to revisit the 2007 list, which included all of TWO companies! I commented on that here (sub req.); it can also be downloaded, for comparison’s sake, below.
I’ve heard predictions that this 49 number could double next year. I’m not sure about that, but given the number of mega-buyout sitting ducks I’m certain the amount of defaulted debt will double. Names of some of the largest buyouts have been tossed around, including worst deal of the year nominee Harrahs, backed by TPG and Apollo.
I have not attempted to measure size this year, but plan to going forward. I hope to track the assets/liabilities as well as the equity investment and fund it was purchased from, whenever I can get my hands on that information (any and all help is appreciated).
And as always, the methodology disclaimer:
This list errs on the side of exclusion. We don’t include deals done by hedge funds, like say, Prentice Capital’s KB Toys or Goody’s, because they don’t raise closed funds the way buyout firms do; they are not buyout firms. Likewise, we don’t include individual investors like real estate mogul Sam Zell and his Tribune Co. bust, since Zell doesn’t have the backing of institutional investors. The list also excludes VC-backed bankruptcies because there is no comprehensive way to know if VC interests have completely exited.
Lastly, PIPEs, even if they’re done out of a buyout fund, are excluded, since that opens up the list to a whole host of other non-LBO investors. This means companies like Sun Capital’s Sharper Image and TPG’s WaMu have been left off.
For your viewing pleasure: