Credit crunch forced seven firms including media firm Vice Media LLC and home security company Monitronics International Inc to file for US Chapter 11 bankruptcy protection in the past 24 hours. This is because these firms feel the crunch from a year of heightened interest.

Companies are finding it hard to renegotiate heavy debt loads acquired during periods of extremely low-interest rates, and this is causing a wave of bankruptcies.

Who Else Filed Chapter 11 Petitions Because of Credit Crunch?

Companies who have filed Chapter 11 petitions include KKR’s Envision Healthcare Corp, Venator Materials Plc. which is a British chemical producer, Cox Operating LLC which is an oil producer, Athenex Inc which is a global biopharmaceutical company, and Kidde Fenwal Inc which manufactures fire protection and temperature control supplies.

Where’s the Problem at?

It is believed that companies from all sectors have been finding it hard to cope with higher interest costs, therefore making the process more challenging for them in order to refinance loans with bonds coming due.

Not only this but in a macroeconomic environment where there are higher rates, companies are also facing troubles from investors and even creditors.

It must be noted that for Vice Media, the filing indicates a sharp decline from its position as a media favorite.

In the year 2017, the company received a $450 million investment from a private equity firm called TPG, which gave the company a shocking $5.7 billion price for a startup.

Well, in a shaky economy, journalism has been a simple target for advertisers looking for ways to reduce costs.

On the other hand, for firms like Monitronics and even Venator, the debt maturities that are approaching the next few years are what caused the breaking point.

The Vice Media

In a Chapter 11 petition as submitted in the Southern District of New York, Vice Media listed both, assets and liabilities, in a range of more than $5000 million to as much as $1 billion.

Creditors such as the Fortress Investment Group, Soros Fund Management, and Monroe Capital got into a deal to buy the company to avoid bankruptcy.

Moreover, the deal allows rival offers to emerge since the investors will purchase its assets for $225 million while taking on heavy liabilities.

Monitronics

Monitronics, a Dallas-based firm, had more than $1 billion in debt coming due in 2024 and said earlier that it had planned to start a Chapter 11 bankruptcy in order to help implement its restructuring.

The company also confirmed that it would cut its debt by $500 million under the pre-planned plan.

Moreover, the firm had previously filed for bankruptcy in the year 2019. Behind this, they planned to give control to the creditors and allow them to slash close to $1 billion in debt.

Envision Healthcare

Interestingly, this medical staffing company had been in conversations about restructuring options after it skipped a mid-April bond coupon payment.

According to reports, the company raised more than $1 billion last year, and still, it has been struggling to make good debt obligations because of high-interest rates and wage inflation.

Therefore, it filed Chapter 11 bankruptcy in the Southern District of Texas and listed both assets and liabilities in the range of $1 billion to around $10 billion.

Venator Materials

Venator’s future debt obligations included a $350 million first-lien term due in August 2024 and around $600 million in notes due in 2025.

The company reflected on the difficult macroeconomic environment in February and said that it had reduced spending and further aimed to reduce inventories.

Moreover, in a petition submitted in Southern Texas, it mentioned both, assets and liabilities, in the range of more than $1 billion to $10 billion.

Cox Operating

This firm had been attempting to reach a final agreement with its creditors on reducing payments to avert filing for bankruptcy.

Moreover, the company’s estimated liabilities and assets hold assets of $100 million to $500 million. 

Athenex 

This pharmaceutical company said that it had also reached an agreement with its creditors to move ahead with an expedited sales process of its assets across its primary businesses. 

Bank

The company is estimated to have $100 to $500 million in liabilities. 

Kidde-Fenwal

This firm said that it would seek more options, such as selling off the company. 

Talking about its liabilities, then it has around $1 billion to $10 billion. 

Proofread & Published By Naveenika Chauhan