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Happy Halloween: PE-Backed Busts Jump in October

After a quiet September, private equity-backed bankruptcies came roaring back in October, with five LBO’d companies collapsing into Chapter 11. Two more minority stake deals also went belly-up, bringing our grand total of PE-backed busts to 74. That’s 66 control-stake deals and 8 minority stake deals.

The biggest fall failure was KKR’s Capmark Financial, formerly part of GMAC. KKR invested $1.5 billion to buy the company, while taking on Capmark’s $7 billion in debt. It didn’t work out too well.

THL Partners’ home ventilation products company, Nortek, also filed for a long-anticipated Chapter 11. The 2004 deal was valued at $1.75 billion, but THL Partners has already earned back 95% of its investment through dividend recaps.

And list leader Sun Capital came back with another bankruptcy after a dry spell last quarter. The firm’s hedge fund, Sun Capital Securities, converted its $70 million debt investment in truck component maker Accuride into a 25% equity stake in January. That equity is now worthless, as the company went bankrupt on October 8.

Download the entire spreadsheet here: peHUB LBO-Backed Bankruptcies 10.2009


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