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With companies filing for bankruptcy on the rise, owners and investors need to think about protecting the money they are owed

With companies filing for bankruptcy on the rise, owners and investors need to think about protecting the money they are owed

Companies filing for bankruptcy: A new normal in the age of coronavirus

With the global economy thrashed by the ongoing pandemic, countless companies are now treading the waters of near-insolvency. And, just like with people, the companies most vulnerable to the coronavirus seem to be those with underlying conditions. As debt levels rise and the sharks of bankruptcy circle, the first casualties have been businesses with preexisting health issues.

 

Companies that have filed for bankruptcy include:

Speedcast International: The Australian satellite internet company, whose global maritime network serves 80% of cruise ships around the world, filed in April, in the Southern District of Texas, where it has offices. The company cited weakness in the cruise market as the pandemic has curbed recreation and leisure travel, which compounded the company’s $600-odd million in old debt, rendering it “impossible” to grab equity lifelines. The company will restructure, backed by $90 million in debtor-in-possession financing.

 

Flybe: Flybe, the British airline that provided more than half of U.K. domestic flights outside of London, entered administration, the U.K. equivalent of bankruptcy proceedings, on March 5. Many of Flybe’s flights had been canceled as Europe—which was quickly becoming the epicenter of the coronavirus pandemic—locked down countries one after another, and the company’s $128 million (100 million British pounds) aid request was denied by the U.K. government. The airline, which has struggled since its 2010 IPO, remains in limbo as all its flights are grounded indefinitely.

 

Virgin Australia: In April, Richard Branson’s airline became the world’s largest carrier to seek bankruptcy protection through voluntary administration in Australia, despite its billionaire founder’s offer of his Caribbean island estate as collateral for funding. The company’s plea for a $903 million (1.4 billion Australian dollars) loan from the Australian government was also denied. Prior to the coronavirus pandemic, Virgin Australia had not posted a profit in seven years, although potential buyers believe it can survive with restructuring.

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