NEW YORK (Reuters) - Billion-dollar bankruptcies are at their highest in five years only half way through 2008, according to bankruptcy filing tracker BankruptcyData.com.
A total of seven U.S. companies with more than a billion dollars in assets have filed for bankruptcy protection so far this year, it said.
Fremont General Corp, which was one of the largest U.S. providers of subprime mortgages before regulators ordered it to stop making the loans, was the largest filing of the year with $13 billion in pre-petition assets, BankruptcyData.com said. Fremont filed for Chapter 11 bankruptcy protection in May, after arranging to sell bank branches and deposits to CapitalSource Inc.
SemGroup LP, the energy trader which filed for bankruptcy protection from creditors last week, was the second-largest bankruptcy filing of the year with $6 billion in pre-petition assets.
“We seem to be in the midst of a ‘perfect storm’ leading to more bankruptcies: high levels of debt, high energy and raw materials costs and weakness in the U.S. economy,” George Putnam, III of New Generation Research, which publishes BankruptcyData.com said in a statement.
He forecast bankruptcies could peak as early as the middle of 2009 or continue rising well into 2010.
The recent spike in billion-dollar bankruptcies, comes only about half way through 2008 and is well above the previous levels. In 2007 only one company listed more than $1 billion in pre-petition assets, New Century Financial Corp. In 2006, auto parts maker Dana Corp had the largest filing, listing $9 billion in pre-petition assets.
The last year in the previous bankruptcy wave was 2003, when there were 15 billion-dollar bankruptcies filed. The number of billion-dollar bankruptcies peaked in 2001 when there were 25, according to BankruptcyData.com.
But the bankruptcies are not yet as large as the filings in the last wave of corporate bankruptcies. The Enron Corp and Conseco Inc bankruptcy filings in 2001 and 2002 each topped $60 billion. WorldCom still holds the record with its $103.9 billion bankruptcy filing in 2002, according to BankruptcyData.com.
Editing by Andre Grenon