Tranzon Auction Properties - Real Estate Auction Blog

While restructuring options for troubled companies over the past five years have been characterized by the easy availability of cash and lower business bankruptcy numbers, many experts are expecting business filing numbers to increase as these funding options dry up in 2007, according to the March edition of CFO Magazine. Nearly 70 percent of restructuring professionals surveyed last year by the American Bankruptcy Institute (ABI) and Dow Jones believe that there will be an increase in U.S. corporate restructurings this year. Restructurings in 2007 confront a far different business environment than the wave experienced in 2001, a year marked by corporate scandals, terrorism and the bursting of the technology bubble. The nature of financing has changed as companies have now contracted with a plethora of lenders in multiple tranches, “guaranteeing a knife fight down at the bankruptcy court,” quips John Penn, a partner at Haynes and Boone. “The number of junior liens out there tells me that companies are starting to get stretched,” he said. “After a boom time, people get the mentality that it’s impossible to fail. They either get into a market they shouldn’t get into or expand a product line that’s unwise, and take on too much leverage.” The second lien market, in fact, skyrocketed to $23 billion in loans in 2006, up from $16 billion in 2005. Click here to read the full article.