Corporate Financial Distress and Bankruptcy
Chapter One
Corporate Distress: Introduction
and Statistical Background
Corporate distress, including the legal processes of corporate bankruptcy
reorganization (Chapter 11 of the Bankruptcy Code) and liquidation
(Chapter 7), is a sobering economic reality reflecting the
uniqueness of the American way of corporate "death." The business failure
phenomenon received some exposure during the 1970s, more during
the recession years of 1980 to 1982, heightened attention during the explosion
of defaults and large firm bankruptcies in the 1989-1991 period,
and an unprecedented interest in the 2001-2002 corporate debacle and
distressed years. In the 1989-1991 period, 34 corporations with liabilities
greater than $1 billion filed for protection under Chapter 11 of the
Bankruptcy Code, and in the three-year period 2001-2003 as many as
100 so-called billion-dollar babies, including the top five, filed for protection
under the Code (see Appendix 1.1).
The lineup of major corporate bankruptcies was capped by the mammoth
filings of Conseco ($56.6 billion in liabilities), WorldCom ($46.0 billion),
and Enron ($31.2 bi ... read full excerpt from Corporate Financial Distress and Bankruptcy: Predict and Avoid Bankruptcy, Analyze and Invest in Distressed Debt ebook
