For the first time in a year, Chapter 11 and real estate bankruptcy filings remained steady in the first quarter of 2021, buoyed by COVID-19-related federal aid packages, eviction moratoriums and the vaccine rollout, as seen in the newest Polsinelli-TrBK Distress Indices Report.
In real estate, filings dropped by only five points, a side effect of the many federal aid and nationwide orders regarding rent freezes/forgiveness, eviction moratoriums and landlord/tenant relations. The report, released today by Am Law 100 firm Polsinelli, also highlights economic distress in the health care industry. In the first quarter, health care distress remained high due to past filings, but the overall number of filings has been very low the last few quarters.
“The number of bankruptcy filings in the health care industry is now lower than we’ve seen in years,” said Polsinelli Shareholder Jeremy Johnson a bankruptcy and restructuring attorney and co-author of the report. “I expect a precipitous drop in the distressed health care index over the next few quarters unless there is very significant activity this quarter.”
The Polsinelli-TrBK Distress Indices are the backbone of a quarterly research report series that uses Chapter 11 filing data – bankruptcies with more than $1 million in assets – as a proxy for measuring financial distress in the overall U.S. economy and breakdowns of distress specifically in the real estate and health care services sectors. It is the only current measurement that tracks both Main Street and Wall Street statistics.
Other significant updates in the report include:
- The Chapter 11 Distress Research Index was 83.60 for the first quarter of 2021. The Chapter 11 Index decreased three points since the last quarter. Compared with the same period one year ago, the Index has increased more than 29 points and compared with the benchmark period of the fourth quarter of 2010, it is down just over 16 points. This is the second highest the Chapter 11 Index has registered since the first quarter of 2011.
- The Real Estate Distress Research Index was 23.47 for the first quarter of 2021. The Real Estate Index has decreased nearly five points since the last quarter. Compared with the same period one year ago, the Index decreased seven points and compared with the benchmark period of the fourth quarter of 2010, it is down just over 76%. This is the first decrease after several stable quarters.
- The Health Care Services Distress Research Index was 396.67 for the first quarter of 2021. The Health Care Index was down 20 points since the last quarter. Compared with the same period one year ago, the Index has increased more than 163 points and compared with the benchmark period of the fourth quarter of 2010, it is up 296 points. The index has exceeded the benchmark every quarter since the third quarter of 2015, often by significant margins, and has continued to track significantly higher than the other indices.
The Polsinelli-TrBK Distress Indices track the increase or decrease in all Chapter 11 filings with more than $1 million in assets since the fourth quarter of 2010. Unlike the public markets, the Polsinelli-TrBK Distress Indices include both public and private companies, creating a broader economic view and one that may show developing trends on Main Street before they appear on Wall Street.
To access the full report, graphs and all past analyses, visit www.distressindex.com.
Polsinelli is an Am Law 100 firm with 900 attorneys in 21 offices nationwide. Recognized by legal research firm BTI Consulting as one of the top firms for excellent client service and client relationships, the firm’s attorneys provide value through practical legal counsel infused with business insight, and focus on health care, financial services, real estate, intellectual property, middle-market corporate, labor and employment and business litigation. Polsinelli PC, Polsinelli LLP in California.