By our count only six private equity-backed companies have filed for Chapter 11 bankruptcy protection in 2010. That’s a far from cry the 24 that occurred in the first quarter of 2009.
In fact, in all of March, there was just a single private equity-backed bankruptcy, which occurred this week. St. Louis-based Electrical Components International Inc., which in 2007 received a $75 million equity investment by Francisco Partners, filed for bankruptcy protection yesterday.I think this is a pretty good sign, considering we recently learned that PE-backed companies are more likely to default (but also more likely to recover). It seems to follow that if the bankruptcy rate of debt-laden companies is dropping, that bodes well for the rest of the economy. Then again, there are a lot (LOT) of debt-laden companies that haven’t even begun to imagine how they’ll go about repaying it. That’s for 2014 my friends…
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, VC-backed companies and PIPEs. We do track minority PE-backed bankruptcies in the chart, but do not include them in the topline numbers.