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Energy, Retail, Finance Led Decade’s Biggest Bankruptcies

Dec. 31, 2019, 11:30 AM

Cratering oil prices and a growing appetite for shopping online fueled the biggest bankruptcies of the 2010s.

Recovery from the 2008 financial crisis didn’t abate the pace of massive corporate reorganization and liquidation during the decade. Technological disruptions, changing consumer behavior, and fossil fuel price volatility contributed to the churn in bankruptcy dockets.

Retail

The “retail apocalypse” accelerated over the last decade, as competitive pressures from Amazon.com Inc. and other e-commerce operators drove sellers of all types and sizes to bankruptcy, often more than once.

Few Chapter 11 cases highlighted large retailers’ struggles more starkly than Sears Holdings Corp., which filed in 2018 with $11.3 billion in liabilities. The historic brand closed hundreds of stores. Creditors continue to fight with the investment company—controlled by Sears’ former CEO Eddie Lampert—that bought the retailer out of bankruptcy.

Iconic toy merchant Toys ‘R’ Us filed Chapter 11 in 2018 with $7.9 billion in debt. It liquidated its North American stores. Tru Kids, which bought Toys’ brand, revived the concept last month when it opened a new Toys ‘R’ Us store in Paramus, N.J.

Radio Shack, which ran hundreds of neighborhood electronic parts stores, didn’t survive its 2015 filing.

Other retailers filing bankruptcy in the last two years include shoe sellers Nine West and Payless ShoeSource, Forever 21, Gymboree, Bon-Ton Stores, Claire’s Stores, Dean Foods, and Full Beauty Brands.

Energy

Four of the ten largest bankruptcy filings in the decade came from energy companies.

Peabody Energy, the nation’s biggest coal producer, filed the decade’s largest Chapter 11 case, listing debts of $68 billion. It emerged from bankruptcy in 2017, and remains one of the world’s largest coal companies, Bloomberg data show.

Pacific Gas & Electric in 2019 filed its second Chapter 11 case in 18 years after destructive and deadly wildfires in California were attributed to its equipment failures. The state’s largest utility listed $51.6 billion in debt. But with the legal battles among the company, creditors, and the state raging on, the actual amount of liabilities may prove much larger.

Energy Future Holdings, a Texas utility, filed Chapter 11 in 2014 with $49.7 billion in debt. In 2017, Sempra Energy outbid Berkshire Hathaway Inc. to buy Energy Future’s 80% stake in Oncor Electric Delivery Co. for $9.45 billion.

SunEdison Inc., once the world’s largest developer of renewable energy, filed in 2016 with $16.1 in liabilities. The company reorganized in a plan confirmed in 2017.

Finance

The financial industry largely roared back from the crisis of 2008. But the fallout from the mortgage industry downturn continued to burden some companies.

Residential Capital LLC., once one of the largest mortgage originators and servicers in the U.S., filed in 2012 with $15.2 billion in debt. It had its Chapter 11 plan confirmed a year later.

Walter Investment Managed Corp. filed bankruptcy in 2017 and emerged the next year, eliminating $800 million in debt and changing its name to Ditech Holding Corp. Ditech filed this year with $12.2 billion in debt. The company eventually sold its regular and reverse mortgage businesses.

MF Global Holdings filed bankruptcy in 2011, with $39.6 billion in debt. The investment bank suffered big losses trading in European sovereign debt. The company’s liquidation was completed in 2016, with customers made whole and unsecured creditors nearly paid in full through an $8.1 billion distribution.

Other Notables

American Airlines owner AMR Corp. filed Chapter 11 in 2011 with $29 billion in debt, not long after the 2010 filing of Japan airlines, which had $25.6 billion in liabilities.

Radio and media giant iHeartMedia filed in 2018 with $20.3 billion. Casino and entertainment monolith Caesars Entertainment Corp. filed in 2015, reorganizing $19.8 billion in debt.

Eastman Kodak’s 2012 filing saw the once ubiquitous film company pivot to office electronics. It had $6.75 billion in debt.

Houghton Mifflin Harcourt Publishing Co., which published authors including Mark Twain and J.R.R. Tolkien, filed in 2012 with $3.5 billion in debt. The company continues to be well known for its textbooks and educational materials.

Many bankruptcy filings over the last years were in the health-care industry, but only hospital and nursery home company Manor Care Inc.'s 2018 filing was among the top 50 filings. It had about $7.1 billion in debt, according to Bloomberg.

Failed for-profit Corinthian Colleges filed in 2015, with $2.9 billion in debt.

To contact the reporter on this story: Daniel Gill in Washington at dgill@bloomberglaw.com

To contact the editors responsible for this story: Roger Yu at ryu@bloomberglaw.com; Seth Stern at sstern@bloomberglaw.com

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