Corporate bankruptcy filings hit 10-year low
NEW YORK -- Bankruptcy filings by US public companies reached a 10-year low in 2004 as low interest rates and better access to financing helped troubled businesses amass cash and pay debts, according to a research report.
This year, 80 public companies filed for bankruptcy, including Trump Hotels & Casino Resorts Inc. and US Airways Group Inc. The total is less than a third of the record 257 publicly traded US corporations -- including Enron Corp. and WorldCom Inc. -- that sought Chapter 11 protection in 2001, according to a Dec. 27 report by New Generation Research.
This year's amount is the lowest since 1994, when 70 public companies sought court protection from creditors.
Low financing costs helped US companies pay down debt and amass a record $1.3 trillion cash stockpile at the end of the third quarter, according to Federal Reserve data.
"The fact there is a very substantial amount of capital and credit available has allowed public companies to refinance outstanding debt and avoid default," said Harvey R. Miller, vice chairman of New York-based investment bank Greenhill & Co.
In November, the percentage of US companies that defaulted on high-risk, high-yield debt in the preceding 12 months stood at 2.56 percent, the lowest since August 1998, according to Standard & Poor's.
Whether the declining trend continues depends on interest rates and how the international community reacts to the US current account deficit, Miller said. 