Case Studies: Signals to Watch for a Company in Distress and Credit Deterioration

There has been an increase in bankruptcy filings of energy companies in the past year, and we are being increasingly bombarded by potential warning signs of more bankruptcies to come. The session will cover how to look for hidden signals of financial distress in corporate disclosures. We will discuss the risks of bankruptcy and corporate restructuring conveyed by financial and investment developments, such as the issuance of second or third lien debt, asset write-downs from the ceiling test, borrowing base redeterminations, covenant waivers, equity issuances, and asset sales. We will also review the applicability of traditional bankruptcy models.