The economic impact of the global pandemic has yet to be seen in the health care industry, at least not in bankruptcy filings, as seen in the newest Polsinelli-TrBK Distress Indices Report. For the first time in more than 13 quarters, the Health Care Services Distress Research Index dipped below 100 points – an unprecedented drop in Chapter 11 filings for the commonly distressed industry.
The second quarter of 2021 marked the lowest ever recorded by the Index since the benchmark period of 2010; this Index had previously exceeded the benchmark for 22 consecutive quarters prior to the end of 2020.
“We’re seeing a truly remarkable change in the health care industry right now. This is the lowest rate of health care bankruptcy filings the Index has ever seen, and we’re seeing clear reasons for that,” said Polsinelli Shareholder Jeremy Johnson, a bankruptcy and restructuring attorney and co-author of the report. “We think this drastic change is due to substantial and continued government support for the most vulnerable of health care industries during the pandemic.”
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.
The report, released today by Am Law 100 firm Polsinelli, also highlights economic distress in the real estate industry. The industry is still experiencing a slow, steady stream of bankruptcies as experts await the anticipated increase in filings from post-pandemic lifting of eviction moratoria.
Other significant updates in the report include:
- The Chapter 11 Distress Research Index was 66.24 for the second quarter of 2021. The Chapter 11 Index decreased more than 17 points since the last quarter. Compared with the same period one year ago, the Index has decreased only two points and compared with the benchmark period of the fourth quarter of 2010, it is down over 33 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 22.24 for the second quarter of 2021. The Real Estate Index has decreased over one point since the last quarter. Compared with the same period one year ago, the Index decreased more than eight points and compared with the benchmark period of the fourth quarter of 2010, it is down over 77 points. This is the first decrease after several stable quarters.
- The Health Care Services Distress Research Index was 63.33 for the second quarter of 2021. The Health Care Index decreased more than 333 points since the last quarter. Compared with the same period one year ago, the Index has decreased over 446 points and compared with the benchmark period of the fourth quarter of 2010, it is down over 36 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.