Bankruptcy and Restructuring
Corporate Restructuring White Paper Series from Ocean Tomo
COVID-19, (the “Coronavirus”), has been a disruptive health and humanitarian challenge that has quickly affected people across multiple continents. It has taken a personal toll on thousands of affected individuals, their caregivers, and health professionals. Within this series of documents, we review the challenges this viral outbreak presents to the business community. Along with reviewing the looming challenges and risks during this period of uncertainty, we will highlight how organizations can proactively manage their impact, with responsive practices to strengthen business resiliency.
Prior to the outbreak of COVID-19, (the “Coronavirus”) US Corporations, encouraged by a decade of historically low interest rates, had raised record levels of debt. In December of 2019, US corporate debt levels had ballooned to $10 trillion, a record 47 percent of the overall economy.
With leverage comes risk. Even before the COVID-19 outbreak major borrowing by corporations was beginning to raise concerns about what would happen in the event of a recession. As the Coronavirus spreads, consumers are staying home and businesses are closing their doors as local governments enact emergency isolation measures. The recession has arrived. In addition to significant downward pressure on those businesses continuing to operate, there is great concern for the survival of the businesses that have had to shut their doors in the face of the Coronavirus. The longer this crisis lasts, the deeper the impact of mandated shutdowns and the greater the likelihood that previously healthy businesses will begin to breach their debt covenants.
It a typical year, thousands of businesses in the United States file for bankruptcy. With Coronavirus, we expect to see a significant further increase in bankruptcies globally. In some cases, these bankruptcies will result in the closure and complete liquidation of the business. In others, bankruptcy will provide a restart opportunity to escape burdensome leases, agreements and revitalize a viable business.
Drawing professionals from each of its business units, Ocean Tomo’s CRRA services uniquely combines industry leading IP market expertise with decades of traditional financial restructuring experience to serve corporations, financial institutions, and investment managers impacted by credit and economic crises. Learn more about Ocean Tomo Corporate Recovery & Restructuring Advisory (CRRA) Services here.