United States: The Year In Bankruptcy: 2017

The initial year of the Trump administration colored much of the political, business, and financial headlines of 2017, both in the U.S. and abroad. Key administration-related developments in 2017 included U.S. withdrawal from the Paris climate accord; decertification of the Iranian nuclear deal; steps to renegotiate the North American Free Trade Agreement; the continued investigation of Russian election interference; the showdown with North Korea over nuclear weapons; U.S. recognition of Jerusalem as the capital of Israel; and the largest U.S. tax reforms in more than 30 years, which included both large corporate tax cuts and repeal of the insurance coverage mandate imposed by the Affordable Care Act, after Republican efforts to repeal the Act in its entirety failed earlier in the year.

These events sometimes overshadowed other newsworthy political and financial global developments, such as the surprisingly good year for economies globally; the messy (and costly) divorce proceedings between the U.K. and the EU; the #MeToo movement; record-setting devastation from natural disasters; the dismantling of the Islamic State and the continuing refugee crisis; and the economic and humanitarian crises in both Venezuela and Puerto Rico.

Highlights of 2017

Among the most memorable business, economic, and financial sound bites of 2017 were "the Trump administration," "Hurricane Harvey," "Hurricane Irma," "Hurricane Maria," "the Equifax breach," "the Paradise Papers," "the Retail Apocalypse," and "the Bitcoin boom/bubble."

January 20: Donald J. Trump is inaugurated as the 45th president of the United States.

February 8: Moody's Investors Service reports that more than $1 trillion of junk-rated corporate debt is slated to mature over the next five years, the highest such total ever recorded by the ratings firm over a five-year period, including the highest single-year volume in 2021, when $402 billion of junk-rated corporate debt is scheduled to come due.

March 2: Bloomberg News reports that U.S. states and local governments have about $2 trillion less than what they need to cover retirement benefits, the result of investment losses, inadequate contributions, and perks granted in boom times.

March 29: In one of the most consequential diplomatic events in Britain since World War II, U.K. Prime Minister Theresa May sends formal notice of the country's intention to withdraw from the European Union, starting a tortuous two-year divorce littered with pitfalls.

May 3: The oversight board established for Puerto Rico under the Puerto Rico Oversight, Management, and Economic Stability Act ("PROMESA") files a petition under Title III of PROMESA to restructure the commonwealth's $74 billion in public bond debt, in the largest bankruptcy case ever filed by a U.S. governmental entity.

June 1: President Trump announces that the U.S. will withdraw from the Paris climate accord, an agreement within the U.N. Framework Convention on Climate Change dealing with greenhouse gas emissions mitigation, adaptation, and finance which was negotiated by representatives of 196 nations in December 2015. Withdrawal could take nearly four years to complete, meaning a final decision would be up to the American voters in the next presidential election.

August 25: Category 4 Hurricane Harvey hits Texas, setting off the most devastating and costly natural-disaster year in U.S. history and ultimately affecting 13 million people in Texas, Louisiana, Mississippi, Tennessee, and Kentucky.

September 6: Category 5 Hurricane Irma, among the most powerful Atlantic hurricanes, with 185-mile-per-hour winds, makes landfall in the Caribbean, then turns toward Florida.

September 7: Equifax, one of the three major consumer credit-reporting agencies, announces that hackers gained access to company data which potentially compromised sensitive information for 143 million Americans, including Social Security numbers and driver's license numbers.

September 8: For the first time in its history, the U.S. federal government reaches (and surpasses) $20 trillion in outstanding debt.

September 19: Category 4 Hurricane Maria makes landfall in Puerto Rico, causing widespread devastation.

November 2: President Trump nominates Jerome H. Powell to chair the U.S. Federal Reserve, bypassing Janet L. Yellen for a second term but selecting a replacement who is expected to stay the course on monetary policy if the economy continues its steady growth.

November 5: The Paradise Papers are released. The latest in a series of leaks made public by the International Consortium of Investigative Journalists, the Papers shed light on the trillions of dollars moving through offshore tax havens.

November 20: The Pension Benefit Guaranty Corporation reports that the deficit in its multi-employer pension plan insurance program is $65.1 billion, a more than $6 billion increase from the last fiscal year and a new all-time high, and that the insurance program stands a greater than 50 percent chance of running out of reserve funds by the end of fiscal year 2025.

November 28: The cryptocurrency Bitcoin trades at $10,000 for the first time, igniting a roller coaster of investment speculation that fuels the Bitcoin boom/bubble.

December 14: The U.S. Federal Communications Commission votes to repeal net neutrality rules imposed during the Obama administration.

December 18: The Dow Jones Industrial Average rises 5,000 points in a year for the first time ever.

December 21: The U.S. Congress gives final approval to a $1.5 trillion tax cut. The plan, which is expected to add more than $1 trillion to the deficit over 10 years, permanently cuts corporate tax rates, provides individual tax-rate cuts that will expire in 10 years if Congress does not act to renew them, repeals the individual mandate in the Affordable Care Act, and aims to simplify the tax code by eliminating and trimming some deductions.

Another Good Year for the U.S.

The year 2017 was a good year for the U.S., with better-than-expected growth in the economy (approximately 2.5 percent); persistently low inflation (approximately 1.7 percent for the second year running); and the lowest unemployment rate (4.1 percent) since February 2001.

These developments prompted the U.S. Federal Reserve to raise its benchmark federal-funds interest rate in December 2017 to 1.5 percent, marking the third increase for the benchmark rate during the year.

Even so, the federal budget deficit widened in fiscal year ("FY") (the period from October 1 through September 30) 2017 to the sixth-highest deficit on record ($668 billion, up 14 percent from the $586 billion deficit in FY 2016), as government spending growth outpaced growth in tax collections for the second year in a row. Moreover, in September 2017, for the first time in its history, the federal government reached (and surpassed) the $20 trillion milestone in outstanding debt.

The value of the U.S. dollar relative to other major currencies dropped 10 percent in 2017, the largest annual decrease since 2003.

North America (and the rest of the world) also experienced record-breaking natural disasters in 2017, with Hurricanes Harvey, Irma, and Maria; California wildfires; a devastating earthquake in Mexico; and widespread flooding in South Asia. In its annual natural catastrophe review, German reinsurer Munich Re reported that insurers will pay out approximately $135 billion for 2017, the most ever. Moreover, total losses in 2017, including those not insured, were $330 billion, the second-worst in history after 2011, when an earthquake and tsunami wreaked havoc in Japan.

The U.S. comprised approximately 50 percent of global insured losses last year. Hurricane Harvey was the most costly natural disaster of 2017, causing losses of $85 billion. Including Hurricanes Irma and Maria, the 2017 hurricane season caused the most damage ever, with losses reaching $215 billion. The National Oceanic and Atmospheric Administration estimated total losses (insured and uninsured) in the U.S. in 2017 at $306 billion, making 2017 the most expensive year on record for natural disasters.

Another Good Year for M&A

According to Thomson Reuters, worldwide M&A activity during calendar year ("CY") 2017 totaled $3.6 trillion, on par with CY 2016 levels and the fourth consecutive year to surpass $3 trillion. Overall, 49,448 worldwide deals were announced during CY 2017, an increase of 3 percent over 2016 and the strongest year for M&A, by number of deals, since records began in 1980. By amount, M&A activity peaked in CY 2015, when it totaled $4.66 trillion.

M&A deals for European targets totaled $867.5 billion during CY 2017, an increase of 17 percent over CY 2016.

With $1.4 trillion in announced deals during CY 2017, the aggregate value of U.S. deals was off 16 percent from CY 2016, even though the number of deals increased by 14 percent.

Globally, private equity-backed M&A activity totaled $322.6 billion in CY 2017, an increase of 27 percent over the previous year.

Among the biggest acquisitions announced in the U.S. during 2017 were drugstore-chain operator CVS Health Corp.'s acquisition of health insurer Aetna Inc. for $69 billion (the year's largest corporate acquisition), Walt Disney Co.'s $52 billion acquisition of film and television businesses from Twenty-First Century Fox Inc., and United Technologies Corp.'s $30 billion acquisition of Rockwell Collins Inc.

Sovereign and Commonwealth Debt

Unlike the previous two years, when the biggest sovereign debt stories featured Greece and Argentina, the sovereign debt focus in 2017 was on the economic and humanitarian calamity in Venezuela, which is in the throes of the worst economic crisis in its history. Beginning during the tenure of deceased President Hugo Chávez and continuing through the administration of current President Nicolás Maduro, the crisis has been marked by hyperinflation, devaluation of the nation's currency, contraction of the economy, severe unemployment, and privation. Venezuela, with some of the world's largest proven crude oil reserves, was crippled when crude oil prices plummeted in 2015. It is widely anticipated that the country will default on its $110 billion in sovereign debt absent a radical reversal of fortune.

Closer to home, another big story in 2017 involved the continuing debt crisis in Puerto Rico. The commonwealth has been struggling for several years to manage more than $144 billion in debt. A 2016 law—the Puerto Rico Oversight, Management, and Economic Stability Act ("PROMESA")—created a mechanism to implement bond debt-adjustment plans in a case comparable to chapter 9 of the Bankruptcy Code, which applies to U.S. municipalities.

On May 3, 2017, Puerto Rico's oversight board filed a Title III petition of PROMESA on behalf of the commonwealth in the largest-ever bankruptcy filing by a governmental entity in the U.S. Title III filings for several Puerto Rico instrumentalities followed shortly afterward. The filings ignited new rounds of litigation with Puerto Rico's bondholders, which collectively hold more than $74 billion in bond debt. Puerto Rico's financial crisis intensified into a humanitarian one in September 2017, when Hurricane Maria caused widespread devastation.

Markets, the Bitcoin Boom/Bubble, and Rebounding Oil

U.S. stock markets closed out their best year since 2013, with major indices hitting a series of record highs buoyed by a combination of strong economic growth, solid corporate earnings, low interest rates, and anticipation of a corporate tax cut. The Dow Jones Industrial Average, the Standard & Poor's 500, and the NASDAQ Composite surged 25.2 percent, 19.5 percent, and 28.2 percent, respectively, during 2017.

The Dow hit 71 record highs during 2017—the most ever in a single calendar year—and finished the year just shy of 25,000. The S&P 500 posted 36 new 52-week highs, while the NASDAQ Composite recorded 81 new highs. Technology companies fueled the gains, with e-commerce giants growing in size and earnings, resulting in increased share prices for companies like Facebook Inc. and Apple Inc. Another key factor underpinning the record increase in U.S. stock prices during 2017: a surprising decline in the U.S. dollar. After years of strength, the biggest decrease for the dollar in a decade boosted corporate profitability and made exports cheaper.

The virtual currency Bitcoin went on a roller-coaster ride in 2017, fueling debate over whether the rush to invest in the volatile cryptocurrency ignited a boom or a bubble. Its price climbed from less than $1,000 apiece at the end of 2016 to nearly $20,000 in December, with sometimes enormous swings in value on a daily basis. The attraction of Bitcoin spawned many other virtual currencies, including Ripple, Ethereum, Litecoin, Dash, and even Petro, the first state-sponsored virtual currency (Venezuela).

Oil prices rebounded in 2017, bringing some prospect for relief to the embattled oil and gas industry. Crude oil hit a multiyear low just above $25 a barrel at the beginning of 2016, but closed 2017 trading above $60—gaining 12 percent on the year—for the first time in more than two years, a sign that cuts in inventories are helping to bring oil supply back in line with increasing global demand.

Business Bankruptcy Filings

According to data provided by the Administrative Office of the U.S. Courts, there were 23,157 business bankruptcy filings during CY 2017, compared to 24,114 in CY 2016. Chapter 11 filings in CY 2017 (both business and personal) totaled 7,442, up from 7,292 in CY 2016.

Eighty-one chapter 15 petitions were filed in CY 2017, compared to 180 in CY 2016. Seven municipal debtors filed for chapter 9 protection in CY 2017, compared to six in CY 2016.

Public Company Bankruptcy Filings

Technically, the largest bankruptcy of CY 2017 was filed not by a public or private company, but by Puerto Rico, a U.S. territory. As noted, Puerto Rico filed a petition under PROMESA on May 3, 2017, to restructure its $74 billion in public bond debt in the largest-ever bankruptcy filing by a governmental entity in the U.S.

According to data provided by New Generation Research, Inc.'s BankruptcyData.com, the uptick in bankruptcy filings for "public companies" (defined as companies with publicly traded stock or debt) since 2014 reversed in 2017, which saw a 27 percent reduction in filings, marking a sharp departure from the respective 25 percent and 48 percent increases seen in the previous two years.

The number of public company bankruptcy filings in CY 2017 was 71, compared to 99 in CY 2016. At the height of the Great Recession, 138 public companies filed for bankruptcy in CY 2008 and 211 in CY 2009.

The combined asset value of the 71 public companies that filed for bankruptcy in CY 2017 was $106.9 billion, compared to $104.6 billion in 2016. By contrast, the 138 public companies that filed for bankruptcy in 2008 had prepetition assets valued at $1.16 trillion in aggregate.

As in 2016, companies in the oil and gas, energy, and mining industries led the charge in public company bankruptcy filings in 2017, with no fewer than 21, or 30 percent, of the year's 71 public bankruptcies, and four of the 10 largest chapter 11 filings of 2017 (compared to eight in 2016).

Although only one of the 10 largest public company bankruptcy filings in 2017 (and two of the 20 largest) came from the retail sector, 2017 was an especially bad year for the industry—so much so that the frequency of failures has been dubbed the "Retail Apocalypse." Amid declining foot traffic and the rise of e-commerce giants like Amazon, bankruptcies among U.S. retailers reached a six-year high in 2017. Fifty public and private retailers filed for bankruptcy in 2017, including retail giants like Toys "R" Us, RadioShack (for the second time), and Payless ShoeSource. According to S&P Global, this represents the highest number of retail bankruptcies since 2011, when 59 companies filed for protection. Overall, the retail sector saw the second-largest volume of public company bankruptcy filings in 2017, with 11 percent of the total.

Mall-based stores and "big-box" stores have been most affected by the retail crisis. According to real estate research firm CoStar, big-box stores accounted for 43 percent, or about 43 million square feet, of shuttered U.S. retail space in 2017. Of the 50 retail bankruptcies, 21 occurred at major retailers. Other companies to file included Wet Seal, hhgregg, rue21, Gander Mountain, American Apparel, Eastern Outfitters, Perfumania, Gordmans, Gymboree, True Religion, Vitamin World, and Charming Charlie. Several retail bankruptcies in 2017 were repeat ("chapter 22") chapter 11 filings.

Other sectors with a significant number of public filings in 2017 included healthcare and medical (9 percent), banking and finance (9 percent), and computers and software (7 percent).

The year 2017 added 22 public company names to the billion-dollar bankruptcy club (measured by value of assets), compared to 25 in 2016. However, the largest public company bankruptcy filing of 2017— global offshore drilling services provider Seadrill Limited, with $21.6 billion in assets—was only the 31st largest public company bankruptcy filing in history.

Twenty-five public and private companies with assets valued at more than $1 billion exited from bankruptcy in 2017—including 10 of the 22 billion-dollar public companies that filed in 2017. Continuing a trend begun in 2012, many more of these companies (23) reorganized than were liquidated or sold.

Seventeen, or 24 percent, of the 71 public company bankruptcy filings in 2017 were prenegotiated or prepackaged chapter 11 cases.

Banks and Pension Insurance

The Federal Deposit Insurance Corporation shuttered eight banks in 2017, compared to five in 2016. By comparison, there were 140 bank failures in 2009 and 157 in 2010, during the height and immediate aftermath of the Great Recession.

In its annual report, the Pension Benefit Guaranty Corporation (the "PBGC"), which insures pensions for approximately 40 million Americans, reported that its overall deficit decreased from $79.4 billion in FY 2016 to $76 billion in FY 2017. However, the deficit in the PBGC's multi-employer program increased by more than $6 billion in FY 2017 to $65.1 billion, a new all-time high. The PBGC distributed $141 million in pension insurance payments to 72 multi-employer plans in 2017, as 30,000 newly retired workers became eligible for benefits. The agency has now run shortfalls in its multi-employer program for 15 straight years. In its most recent Projections Report, the PBGC estimated that there is a 50 percent chance that its multi-employer program will run out of money by the end of FY 2025, and there is considerable risk that it will run out even sooner without congressional action.

Distressed Debt and Bankruptcy Restructuring

According to Thomson Reuters, completed distressed debt and bankruptcy restructuring activity during 2017 (both in- and out-of-court) totaled $282.2 billion globally, an 18 percent decrease from 2016. The number of completed deals also decreased, with 302 deals during 2017, compared to 350 during 2016. Deals involving companies in the Energy & Power sector accounted for 28 percent of the total, while companies in the Industrials and the Government & Agencies sectors followed, capturing market shares of 13 percent and 11 percent, respectively.

U.S. completed deal activity totaled $114.4 billion during 2017, a 38 percent decrease from 2016. There were 106 restructuring transactions completed in the U.S. in 2017, 20 fewer deals than in 2016. Deals involving Energy & Power sector companies accounted for 34 percent of the U.S. debt restructuring market, while Media & Entertainment sector company deals followed, with 17 percent of the total.

Top 10 Bankruptcies of 2017

Continuing a trend reflecting the persistent vulnerability of oil and gas producers to weakened worldwide demand and oil prices that, despite breaking the elusive $60-per-barrel mark at year-end, have been chronically depressed, four of the 10 companies on the Top 10 List of "public company" (defined as a company with publicly traded stock or debt) bankruptcies of 2017, and nearly half of the Top 20, came from the oil and gas industry (compared to nine of the Top 10 bankruptcies in 2016). Three companies on the Top 10 List were in the banking and financial services industry, whereas the retail, telecom, and utilities sectors each had one representative. Each company gracing the Top 10 List for 2017 entered bankruptcy with assets valued at approximately $3 billion. Six of the companies on the Top 10 List filed prepackaged or prenegotiated chapter 11 cases.

Hamilton, Bermuda-headquartered, global offshore drilling services provider Seadrill Limited ("Seadrill") grabbed the brass ring for 2017 when it filed for chapter 11 protection on September 12, 2017, in the Southern District of Texas, listing $21.6 billion in assets and $11.6 billion in debt. Concurrent with its chapter 11 filing, Seadrill announced its entry into a prenegotiated restructuring agreement with more than 97 percent of its secured bank lenders, approximately 40 percent of its bondholders, and a consortium of investors led by its largest shareholder. Under the agreement, Seadrill will be recapitalized with $860 million of secured notes and $200 million of equity. Seadrill's secured lenders agreed to defer the maturities of $5.7 billion in secured credit facilities and, assuming unsecured creditors support the plan, Seadrill's $2.3 billion in unsecured bonds and other unsecured claims will be converted into approximately 15 percent of the post-restructuring equity. Holders of Seadrill common stock will receive approximately 2 percent of the post-restructured equity. Seadrill was forced to file for chapter 11 protection due to maturing debts and a downturn in the offshore drilling business.

Walter Investment Management Corp. ("Walter Investment"), a Fort Washington, Pennsylvania-based originator and servicer of residential mortgage loans that operates through Ditech Financial LLC ("Ditech") and Reverse Mortgage Solutions Inc. ("Reverse Mortgage"), defaulted into the No. 2 spot on the Top 10 List for 2017 when it filed a prepackaged chapter 11 case on November 30, 2017, in the Southern District of New York with $16.8 billion in assets and $16.5 billion in debt. The plan, which was confirmed by the bankruptcy court on January 18, 2018, reduced Walter Investment's debt by $806 million and turned ownership of most of the company over to bondholders. From 2010 through 2015, Walter Investment expanded its servicing and originations businesses by acquiring Reverse Mortgage and Security One Lending Inc. Debt incurred in connection with those deals contributed to the company's financial problems, including a liquidity crunch due to pressures from lenders. Management has also been trying to cut costs while shifting Walter Investment's business model toward a "fee for service" model in lieu of heavy investment in mortgage servicing rights. Ditech and Reverse Mortgage did not file for bankruptcy.

Another victim of the retail malaise that dragged more than 50 companies into bankruptcy in 2017 and created mayhem in the toy industry, Wayne, New Jersey-based Toys "R" Us, Inc. ("Toys 'R' Us") played into the No. 3 spot on the Top 10 List for 2017 when it filed for chapter 11 protection on September 19, 2017, in the Eastern District of Virginia, listing $6.9 billion in assets and $8 billion in debt. Toys "R" Us, the largest toy retailer in the U.S., with approximately 1,600 stores, struggled with a rising debt load and competition from rivals Amazon, Wal-Mart, and Target. The bankruptcy filing was triggered when vendors and suppliers tightened terms with the company ahead of the key holiday selling season, which accounted for 40 percent of its $11.5 billion in revenue in 2016. The company's Canadian subsidiary also sought protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice.

California and New Jersey-based multinational technology company Avaya Inc. ("Avaya") dialed into the No. 4 spot on the Top 10 List for 2017 when it filed for chapter 11 protection on January 19, 2017, in the Southern District of New York, listing $6.8 billion in assets and $10.2 billion in debt. Avaya filed for bankruptcy on the same day it revealed it had rejected a $3.9 billion bid for its call center software business, citing the filing as a "critical step" in its shift in focus from telecommunications hardware to software and related services. Avaya emerged from bankruptcy on December 15, 2017, after the bankruptcy court confirmed a chapter 11 plan under which first-lien lenders and the Pension Benefit Guaranty Corporation swapped their debt for substantially all of Avaya's new equity.

The gusher of oil and gas sector bankruptcies continued when Luxembourg-based floating-rig drilling contractor Pacific Drilling S.A. ("Pacific Drilling") splashed into the No. 5 spot on the Top 10 List for 2017 by filing for chapter 11 protection on November 12, 2017, in the Southern District of New York, listing $6 billion in assets and $3.3 billion in debt. Like other drilling companies, Pacific Drilling has been plagued by the global downturn in the oil and gas industry.

The No. 6 berth in the Top 10 List for 2017 belonged to New Orleans-based offshore oil sector services company Tidewater Inc. ("Tidewater"), which filed a prepackaged chapter 11 case on May 17, 2017, in the District of Delaware, listing $5 billion in assets and $2.3 billion in debt. Tidewater operates a fleet of more than 250 seagoing vessels that support the oil drilling industry with services which include towing, anchor handling, supply and personnel transportation, and specialized services such as pipe and cable laying. The company is yet another victim of the dramatic drop in oil prices that has sent many companies to the harbor of chapter 11 protection. Many Tidewater customers are still operating at reduced capacity and spending less on the company's products and services. On July 13, 2017, the bankruptcy court confirmed Tidewater's prepackaged plan, which provides for a $2 billion debt-for-equity swap.

Chesterbrook, Pennsylvania-based J.G. Wentworth Inc. ("J.G. Wentworth"), a financial services firm and buyer of deferred payments in the form of annuities, structured settlements, life insurance policies, and other hard-to-sell assets, cashed out into the No. 7 spot on the Top 10 List for 2017 when it filed a prepackaged chapter 11 case on December 12, 2017, in the District of Delaware with $5 billion in both assets and debt. J.G. Wentworth faced heavy debt loads and increased competition. The bankruptcy court confirmed a chapter 11 plan for J.G. Wentworth on January 17, 2018. The plan eliminates $450 million in debt from the company's balance sheet through a debt-for-equity swap with lenders. J.G. Wentworth's operating units, which include a mortgage-lending business, were not part of the bankruptcy filing. It was J.G. Wentworth's second chapter 11 filing in eight years.

Houston, Texas-based power producer GenOn Energy, Inc. ("GenOn") fizzled into the No. 8 spot on the Top 10 List for 2017 when it filed a prenegotiated chapter 11 case on June 14, 2017, in the Southern District of Texas with $4.9 billion in assets and $4.5 billion in debt. Under the plan, which was confirmed by the bankruptcy court on December 12, 2017, GenOn's parent company NRG Energy Inc. ("NRG"), the largest independent U.S. power producer, ceded control of GenOn to the company's bondholders. Profits at NRG and GenOn have suffered in recent years from weak demand and plunging electricity prices brought on by cheap natural gas.

New Orleans-based First NBC Bank Holding Company ("FNBC Holding") failed into the No. 9 spot on the Top 10 List for 2017 when it filed a liquidating chapter 11 case on May 11, 2017, in the Eastern District of Louisiana. FNBC Holding was the parent company of First NBC Bank, a New Orleans metropolitan area and Florida panhandle nonmember bank closed by the Louisiana Office of Financial Institutions on April 28, 2017, and subsequently placed into receivership with the Federal Deposit Insurance Corporation. As a result of First NBC Bank's closure, FNBC Holding's asset values fell from $4.7 billion reported in its most recent 10-K filing to no more than $10 million listed in its bankruptcy filings.

Houston, Texas-based Memorial Production Partners LP ("MPP") wildcatted into the final spot on the Top 10 List for 2017 when it filed a prepackaged chapter 11 case on January 16, 2017, in the Southern District of Texas with $2.9 billion in assets and $2.3 billion in debt. MPP, through its subsidiary, Memorial Production Operating LLC, engaged in the acquisition, development, exploitation, and production of oil and natural gas properties in Texas, Louisiana, Colorado, Wyoming, and offshore Southern California. Now known as Amplify Energy Corp., MPP emerged from bankruptcy on May 4, 2017, as a corporation, rather than a master limited partnership, after the bankruptcy court confirmed its prepackaged plan, which reduced the company's debt burden by approximately $1.3 billion.

Other notable debtors (public, private, and foreign) in 2017 included the following:

The Commonwealth of Puerto Rico, which filed a petition on May 3, 2017, in the District of Puerto Rico under Title III of PROMESA, legislation patterned on chapters 9 and 11 of the Bankruptcy Code, for the purpose of restructuring $74 billion in public bond debt, in what would be the largest restructuring ever by a governmental entity in the U.S.

Houston, Texas-based oil and natural gas property developer Vanguard Natural Resources LLC, which filed a prenegotiated chapter 11 case in the Southern District of Texas on February 1, 2017, and emerged from bankruptcy on August 1, 2017, after the court confirmed a plan that eliminated $708 million in debt through a debt-for-equity swap.

Privately held Takata Americas, a U.S. unit of Japanese airbag maker Takata Corporation, which filed for chapter 11 protection on June 25, 2017, in the District of Delaware to manage more than 40 million recalls for defective airbag inflators and thousands of related lawsuits. Takata Americas hopes to sell substantially all of its assets in bankruptcy for $1.6 billion to competitor Key Safety Systems Inc., with some of the sale proceeds going toward the $825 million the company owes the U.S. Department of Justice in connection with the company's $1 billion criminal plea deal in 2016.

Atlanta, Georgia-based radio giant Cumulus Media Inc., owner and operator of 446 radio stations across 90 U.S. media markets, as well as approximately 8,000 stations affiliated with its Westwood One platform, which filed a prenegotiated chapter 11 case on November 29, 2017, in the Southern District of New York to deal with a significant debt overhang left by years of underperformance and stiff competition from its rival, iHeartMedia Inc.

Homer City Generation, L.P., a GE Capital-owned power plant operator that owns a 1,884-megawatt coal-fired plant in Pennsylvania, which filed its second prepackaged chapter 11 case in four years on January 11, 2017, in the District of Delaware to slash $600 million in debt by means of a debt-for-equity swap with noteholders and emerged from bankruptcy on April 6, 2017.

Air Berlin PLC & Co. Luftverkehrs KG, Germany's second-largest airline (after Lufthansa), whose foreign representative filed a chapter 15 petition on August 8, 2017, seeking recognition of the budget airline's German insolvency proceedings and protection of the company's U.S. assets from seizure by creditors.

Privately held 1,300-store children's clothing retailer Gymboree Corp., which filed a prenegotiated chapter 11 case on June 11, 2017, in the Eastern District of Virginia to restructure more than $1.1 billion in debt incurred during a 2010 leveraged buyout by means of a debt-for-equity swap and emerged from bankruptcy on September 29, 2017.

M&G USA Corp., the U.S. chemicals business of Italian plastics multinational Mossi Ghisolfi Group, which filed for chapter 11 protection on October 31, 2017, in the District of Delaware together with several affiliates due to a liquidity problem caused by overruns at an unfinished Corpus Christi, Texas, factory for making resins used in drink bottles (the world's largest facility for manufacturing polyethylene terephthalate (PET) resin), after its ultimate parent filed a creditor arrangement proceeding in Italy on October 17, 2017.

Privately held Florida-based 21st Century Oncology Holdings, Inc., one of the largest integrated U.S. networks of cancer treatment centers and affiliated physicians, with 145 clinics in 16 states. The company filed a prenegotiated chapter 11 case on May 25, 2017, in the Southern District of New York to slash $550 million in debt amid declining profits due to lower reimbursement rates and higher denials of coverage, changes in Medicare radiation payments, the need to comply with electronic health records regulations, uncertainty in the health insurance market, and allegations of civil and criminal misconduct. The court confirmed the chapter 11 plan on January 11, 2018.

Georgia-Pacific affiliate Bestwall LLC, a former manufacturer of asbestos-containing joint compound used to seal drywall, which filed for chapter 11 protection on November 2, 2017, in the Western District of North Carolina. In the filing, the company stated its intention to establish a chapter 11 plan trust to manage more than 62,000 asbestos claims pending against it and deal with the financial burden that resulted from being named a defendant in approximately 70 to 80 percent of all mesothelioma cases filed in the U.S. each year.

Toshiba Corporation subsidiary Westinghouse Electric Company, the renowned provider of nuclear power plant products and services that was instrumental in the development of nuclear energy and the electric grid itself. It filed for chapter 11 protection on March 29, 2017, in the Southern District of New York as the company's corporate parent scrambled to stanch huge losses stemming from Westinghouse's troubled nuclear construction projects in the American South amid slowing demand for electricity, tumbling prices for natural gas, safety concerns regarding nuclear power, and rapidly maturing alternative-energy sources like wind and solar power.

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Mark G. Douglas
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Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions