Last week, Yahoo Finance had an interesting article about 10 big companies with troubled finances.
Citing a report by Audit Integrity, an independent corporate accounting researcher, these 10 publicly traded companies had the highest probability of declaring bankruptcy. Like many of their American customers, these companies may be seeing less income coming in and debts that just won't shrink. On the list:
- Hertz: financing a fleet of new models while consumers cut travel and spending.
- Sprint Nextel: phone customers are fleeing for rival carriers with more popular "smart phone" models.
- Macy's: customers are shying away from higher-end department stores in favor of more affordable shopping.
- CBS: TV advertising dollars aren't what they used to be, and CBS's difficulty may be a sign that other broadcasters could lose their footing as well.
Whether or not any of these companies end up filing bankruptcy remains to be seen. Signs of economic recovery could find investors sighing with relief.
Corporate Bankruptcy Chapters
Like consumers, businesses typically have two options when filing bankruptcy: Chapter 7 bankruptcy and Chapter 11 bankruptcy.
Chapter 7 bankruptcy for corporations works like chapter 7 personal bankruptcy, in which assets are sold, or liquidated, to repay creditors.
Chapter 11 bankruptcy is similar to chapter 13 for consumers, in which corporation enter a structured plan to repay creditors over time.