Except for disastrous fires that sparked the largest bankruptcy filing of the year, liabilities arising from the opioid crisis, the fallout from price-fixing, and corporate restructuring shenanigans, economic, market, and leverage factors generally shaped the large corporate bankruptcy landscape in 2019. California electric utility PG&E Corp. ("PG&E") filed the biggest bankruptcy of 2019 when it sought chapter 11 protection for the second time at the end of January to deal with billions of dollars of liabilities arising from its alleged role in causing the most deadly wildfires in California history. Fentanyl-based painkiller maker Insys Therapeutics Inc. and privately held OxyContin maker Purdue Pharma L.P. filed for chapter 11 protection in June and September, respectively, hoping to implement global settlements of nationwide claims arising from their manufacture and sale of opioids. Canned seafood distributor Bumble Bee Tuna floundered into chapter 11 in November after spending millions of dollars defending against antitrust lawsuits related to its admitted role in a price-fixing scheme with competitors. Finally, internet service provider Windstream Holdings, Inc. sought chapter 11 protection in February in response to a $310 million judgment against it in a lawsuit alleging that a two-year-old spinoff of the company's fiber-optic cable network violated the covenants on one of its bond issuances.
According to data provided by Epiq Systems, Inc., the 38,944 total commercial bankruptcy filings during 2019 increased 2.4% from the commercial filing total of 38,032 during 2018. The commercial chapter 11 filing total of 5,502 during 2019 represented a 0.36% increase from the 5,482 commercial chapter 11 filings in 2018. There were 22,797 commercial chapter 7 filings in 2019, compared to 21,907 in 2018.
One hundred twenty-eight petitions seeking recognition of a foreign bankruptcy proceeding under chapter 15 of the Bankruptcy Code were filed in 2019, compared to 100 in 2018. One hundred seven of the 2019 chapter 15 filings were by businesses, compared to 91 in 2018. Five municipal debtors filed for chapter 9 protection in 2019, compared to four in 2018.
Research firm Reorg reported that 2019 was the busiest year for chapter 11 filings since it started tracking them in 2015. For chapter 11 cases filed by companies with more than $100 million in liabilities, the filing frequency increased 24% from 2018. One hundred fourteen companies with liabilities exceeding $100 million filed for chapter 11 protection in 2019, compared to 87 in 2018. The most cases were filed in the energy sector, followed by the consumer discretionary and health care sectors.
Four hundred companies with liabilities exceeding $10 million filed for chapter 11 in 2019, compared to just over 330 filings in 2018, a 21% increase. Consumer discretionary sector companies grabbed the largest share of the filings, with companies in the real estate, industrials, energy, and health care sector making up roughly equal shares of the filings. Delaware, the Southern District of New York, and the Southern District of Texas were the most popular venues for chapter 11 filings by such companies. Fifty-two of the 400 chapter 11 filings (13%) were prepackaged or prenegotiated cases.
According to data provided by New Generation Research, Inc.'s BankruptcyData.com, bankruptcy filings for "public companies" (defined as companies with publicly traded stock or debt) increased for the first time since 2016, with the volume of prepetition assets nearly tripling to its highest level since the end of the Great Recession. The number of public company bankruptcy filings in 2019 was 63, compared to 58 in 2018. At the height of the Great Recession, 138 public companies filed for bankruptcy in 2008 and 211 in 2009.
The combined asset value of the 63 public companies that filed for bankruptcy in 2019 was $150 billion, compared to $52 billion in 2018. By contrast, the 138 public companies that filed for bankruptcy in 2008 had prepetition assets valued at $1.2 trillion in aggregate.
Companies in the oil and gas and chemicals and allied products sectors led the charge in public company bankruptcy filings in 2019, with 21% (13 cases) and 16% (10 cases), respectively, of the year's 63 public company bankruptcies. Other sectors with a significant number of public company filings in 2019 included telecommunications (five cases), health care and medical and transportation (four cases each). Three cases each involved companies in the banking and finance, computers and software, mining, and retail sectors. Half of the 20 largest public company bankruptcy filings in 2019 came from the oil and gas sector.
The year 2019 added 18 public company names to the billion-dollar bankruptcy club (measured by value of assets), compared to 12 in 2018. The largest public company bankruptcy filing of 2019—PG&E, with more than $71 billion in assets—was the sixth largest bankruptcy of all time. By asset value, the remaining public companies among the 10 largest bankruptcy filings in 2019 were Ditech Holding Corporation ($14.2 billion in assets); Windstream Holdings, Inc. ($13.1 billion in assets); Weatherford International plc ($6.6 billion in assets); Thomas Cook Group plc ($6.6 billion in assets); EP Energy Corporation ($4.2 billion in assets); Bristow Group Inc. ($2.9 billion in assets); Southern Foods Group, LLC (Dean Foods Company) ($2.3 billion in assets); Sanchez Energy Corporation ($2.2 billion in assets); and Hexion Holdings LLC ($2.1 billion in assets).
Twenty public and private companies with assets valued at more than $1 billion obtained confirmation of chapter 11 plans or exited from bankruptcy in 2019. Continuing a trend begun in 2012, many more of those companies reorganized than were liquidated or sold.
Ten, or 16%, of the 63 public company bankruptcy filings in 2019 were prenegotiated or prepackaged chapter 11 cases, compared to 12% (seven cases) in 2018. The "rapid-fire prepack" was in vogue in 2019. Information technology company Sungard Availability Services Capital Inc. established a new record when it obtained bankruptcy court approval of a prepackaged chapter 11 plan on May 2, 2019, a mere 19 hours after filing for bankruptcy. The expedited confirmation process surpassed the previous 24-hour record set on February 4, 2019, by women's plus-size retailer Fullbeauty Brands Inc.
Some of the notable court rulings involving issues of bankruptcy law in 2019 included: