November 2, 2015
Mid-Market and up Appear to be Diverging from Broader Trends in Falling Bankruptcy Filings

Polsinelli announced the release of the Polsinelli I TrBk Distress Indices for the Third Quarter of 2015. The indices, unique in the industry and proprietary to Polsinelli, are published on a quarterly basis in conjunction with bankruptcy information provider The Distress Indices are currently available here.
The Polsinelli I TrBk Distress Indices are research indices that use Chapter 11 bankruptcy filing data as a proxy for measuring financial distress in the overall U.S. economy, the real estate sector, and the healthcare services sector.  The indices are likely to be contrarian indicators of economic performance, so that a high index value reflects increasing financial distress in the economy. The indices track the increase or decrease in comparative Chapter 11 filings for prior quarters and years, based on a rolling four-quarter average.  

The Chapter 11 Distress Research Index was 42.89 for the third quarter of 2015.  While the Administrative Office of the U.S. Courts released figures last week showing a year-on-year decline of almost 12% in business bankruptcy filings, distress among the narrower group of mid-market and bulge-bracket companies filing Chapter 11 tracked by the index appears to have stabilized at pre-recessionary levels.  After dramatic declines for four years, the Chapter 11 Index has remained within a range of 5 points for the last year and is within approximately a half point of one year ago. 

The Real Estate Distress Research Index was 27.71 for the third quarter of 2015. This represents the first increase in the index since the start of the index-measurement period in 4th quarter 2010.  The index has remained within a range of 7 points for the last year, and also appears to be stabilizing at pre-recessionary levels.  Compared to the same period one year ago, the index has dropped by just over 21%.

The Healthcare Services Distress Research Index was 98.33 for the third quarter of 2015. The Healthcare Services Index is the only one of the Indices which has fallen in the current quarter.  It shows the most continuing volatility, having climbed to reach a high of 138.33 in the last two quarters of 2014 and now having fallen to just under 100.  

A copy of the Q3 2015 can be found here.