Polsinelli released today the Polsinelli/TrBk Distress Indices
for the first quarter of 2018, signaling increased distress in the U.S. economy. Specifically, the report – which is based on chapter 11 bankruptcy filings with over $1 million in assets – shows economic distress is rising across the board and in the real estate and health care industries.
“What’s significant this quarter is that the distress index is up in all three areas we track. For almost the last two years, we have seen a sustained increase in health care distress, and now we are seeing a steady rise in general distress and real estate over the last 3 consecutive quarters,” said Jeremy Johnson
, a bankruptcy and restructuring attorney at Polsinelli and one of the authors of the report.
The Polsinelli/TrBk Distress Indices are the backbone of a quarterly research report series that uses Chapter 11 filing data as a proxy for measuring financial distress in the overall U.S. economy, and breakdowns of distress in the real estate and the health care services sectors.
The rise in distress is attributable to several causes. For instance, in health care, tort liability and reimbursement issues continue to drive health care providers into bankruptcy to seek alternatives, Johnson says. He also attributes some of the distress to uncertainty surrounding the Affordable Care Act.
“We know that the political climate and uncertainty in health care are helping drive economic distress,” Johnson said.
Key research takeaways from the first quarter of 2018 include:
- The Chapter 11 Distress Research Index was 54.02, reflecting an increase over 5 points since the last quarter. This index has increased each of the last three quarters. Compared with the same period one year ago, the index has increased over 8 points, and compared with the benchmark period of fourth quarter of 2010, it is down approximately 46 percent.
- The Real Estate Distress Research Index was 33.93, representing an increase just over 1 point since the last quarter. This index has increased each of the last three quarters. Compared with the same period one year ago, the index has increased over 8 points, and compared with the benchmark period of fourth quarter of 2010, it is down approximately 66 percent.
- The Health Care Services Distress Research Index was 455.00 for the first quarter of 2018. This is an increase over 173 points from last quarter’s record high, approximately 62 percent. The index has experienced record or near-record highs in seven of the last eight quarters. Compared with the same period one year ago, the index has increased over 333 points, approximately 270 percent, and compared with the benchmark period of fourth quarter of 2010, it is up approximately 355 percent.
- On a trailing four-quarter average, the percentage of real estate filings among all index-measured Chapter 11 filings has decreased from 19.98 percent in 2010 to 12.55 percent now, decreasing slightly since the last quarter. Health Care services filings have increased from 1.13 percent in 2010 to 9.52 percent, a significant increase from last quarter.
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 which may show developing trends on Main Street before they appear on Wall Street.
Find the full report, including graphs and all past analysis, here
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and #10 for best client relationships2
among 650 U.S. law firms, Polsinelli was also named among the top 20 best-known firms in the nation3
. 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, mid-market corporate, labor and employment, and business litigation. www.polsinelli.com
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For additional information, contact Carrie Trent