US bankruptcy claims trading at year high in Sept

Wed Oct 19, 2011 1:36pm EDT

* Value of claims traded in September doubled from August

* Sept bankruptcies, by assets, highest since Nov 2009

Oct 19 (Reuters) - The face value of U.S. bankruptcy claims traded in September was the highest since July 2010, according to a report released on Wednesday.

The value of claims traded in September doubled from August to $4.52 billion, according to SecondMarket, which runs a claims trading platform. The number of claims traded in September rose to 1,264 from 891 in August.

Creditors such as landlords and trucking companies can trade or sell their claims against bankrupt companies. The seller gets immediate cash, while the buyer, often a hedge fund investor, hopes to make a profit by betting on the timing and ultimate payout in the bankruptcy.

Bankruptcy filings have risen recently as lenders have pulled the plug on struggling companies such as magazine paper maker NewPage Corp and solar panel maker Solyndra LLC.

Companies with $4.9 billion in pre-bankruptcy assets filed for Chapter 11 in September, the most since November 2009, according to Andrew Gottesman, who heads the bankruptcy claims market for SecondMarket.

Unlike 2009, when bankruptcy filings cut across all industries, the latest increase has been specific to a few hart-hit sectors, he said.

"Sit-down casual restaurants are getting murdered. Airlines could be next," he said.

Lehman Brothers Holdings Inc , by far the largest bankruptcy in U.S. history, had the highest number and value of claims traded in September, as it does every month.

Other active cases included restaurant chain Perkins & Marie Callender, defunct telecoms equipment maker Nortel Networks Inc , law firm Heller Ehrman LLP, and college bookstore owner Nebraska Book Co.

The cases with the highest face value of claims traded included grocer Great Atlantic & Pacific Tea Co , defunct book retailer Borders Group Inc , and Nortel.

Centaur LLC, which operates horse racing tracks, had one traded claim with a face value of $28.8 million, which was enough to rank it No. 2 behind Lehman in value of claims traded.