A Nortel Chapter 11 bankruptcy filing sent stocks into a tailspin. Bloomberg considers the Nortel news – and declining December retail sales in the US – to be signs that the recession is nowhere near the final low, but instead that economies are still sinking. With Nortel bankrupt, what 2009 business bankruptcy filings have you missed?
Those who thought that mining companies would be on the chopping block this year are correct. Apex Silver Mines Limited, a corporation headquartered in Denver, Colorado, also filed for Chapter 11 bankruptcy. Another Colorado firm filing for Chapter 11 bankruptcy protection is the Shane Company, known for the slogan “now you have a friend in the diamond business.” The Denver Post reported that the filing revealed a total of 6,000 creditors and assets as well as debts in excess of $100-500 million.
In an interesting twist, Tronox, Inc. filed for Chapter 11 for its American ventures only, specifically excluding its operations situated in the Netherlands, Germany and also Australia. It appears that the company is trying to get out from under the liabilities it incurred while it was spun off by Kerr-McGee Corporation, among them environmental remediation.
In plain English, Tronox cannot or will not pay for the removal of pollutants its company released into the environment and thus hopes that a Chapter 11 will accommodate its use of fiscal resources elsewhere and leave someone else paying the bill. In a bizarre interpretation of the news, a spokesman for the state opined – as reported in the Review Journal – that “the remediation will go on as it has in the past. The state will not be on the hook for any additional costs.” Who will?
The Denver Business Journal suggests that companies filing for Chapter 11 “die 99 percent of the time. It used to be 85, but now it’s 99.” Not far behind in the doomsday prediction department is the Plain Dealer which quotes C. Britt Beemer, who is chairman of America’s Research Group Ltd, and who believes that “you’ll see more retail bankruptcies in the first six months of next year than in the last five years combined.” He is referencing 2009.
It would appear that the Nortel bankruptcy filing is simply the tip of the 2009 business bankruptcy filing iceberg.
Sources: http://www.bloomberg.com/apps/news?pid=20601082&sid=aSo0vp9_rZAY&refer=canada; http://phx.corporate-ir.net/phoenix.zhtml?c=113158&p=irol-newsArticle&ID=1244050&highlight=; http://www.tronox.com/NewsReleaseFiles/news_20090111.htm; http://denver.bizjournals.com/denver/othercities/kansascity/stories/2008/12/29/story12.html?b=1230526800%5E1753504; http://www.lvrj.com/business/37491909.html; http://blog.cleveland.com/business/2008/12/retail_experts_predict_more_st.html