Bankruptcy Exposure Monitor

Yes, I know, another post about bankruptcies, but to say that Q1 2009 has been notable would understate the obvious. As it relates to bankruptcies there are two points of interest that we take note of in each filing, the companies that file and the often overlooked creditors who have capital at risk. Given the flurry of activity over the last three months, we thought it would be helpful to review the quarter in aggregate.

YTD there have been 8 retailers file for bankruptcy. As a point of reference, over the last ten years there have been up to 22 retail bankruptcies in a single year only twice, in 2001 and 2008 and so far we are on pace to top that by nearly 50%. With the number of filings mounting, it’s important to keep track as small increments can add up quickly for creditors who find themselves at risk in multiple bankruptcies. Some notables from the list creditors:

Bankruptcy Exposure Monitor - Bankruptcies09EPSImpact

Columbia and Quicksilver have the unfortunate distinction of being the only companies with capital at risk in three separate bankruptcy filings. Given that consensus estimates are $0.07 and $0.05 respectively, a couple pennies are worth noting even though we have COLM earning in the range of $0.20 in Q1.

Other creditors exposed by multiple filings include Warnaco and Hanesbrands albeit with no more than a $0.01 at risk.

Are these totals enough to sound the alarm on any of our creditors that they too may soon fall victim to the same fate, not just yet. But we’ll be keeping track and let you know if that changes.

Casey Flavin



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