Distress Levels Hold Steady Through the Fourth Quarter of 2022

The Polsinelli-TrBK Distress Indices Monitor on Rolling Four-Quarter Basis

Kansas City, Missouri, UNITED STATES


NEW YORK, Feb. 09, 2023 (GLOBE NEWSWIRE) -- As expected, levels of distress detailed in the newest Polsinelli-TrBK Distress Indices Report held steady through the fourth quarter of 2022. Although most industry experts are projecting a significant increase in distress and bankruptcy filings, the data have not yet caught up to the speculation. In fact, on an annual basis, there were slightly fewer Chapter 11 filings in 2021 than in 2022.

Although overall distress levels were relatively stable, there were some anomalies in the filing data. The report, released today by Am Law 100 firm Polsinelli, shows that Health Care had significant distress in the fourth quarter, with over three times the number of health care filings than in the second and third quarters combined. The fourth quarter had the highest number of health care filings in the past four quarters and the second-highest in the last 2 1/2 years.

Real Estate saw continued distress, maintaining a steady level of filings with a slight uptick in the fourth quarter. General Chapter 11 filings also remained relatively steady compared to prior years, but it is worth noting that the number of Chapter 11 filings in the second half of 2022 significantly exceeded the filings in the first half.

“It is probably premature to call last quarter the calm before the storm,” said Polsinelli Shareholder Jeremy Johnson, a bankruptcy and restructuring attorney and co-author of the report. “Although filing numbers have remained relatively steady year over year, the number of bankruptcy filings increased in the last half of 2022. If that trend continues, there will be significant restructuring opportunities in 2023.”

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 34.44 for the fourth quarter of 2022. The Chapter 11 Index was approximately the same as the last quarter. Compared with the same period one year ago, the Index has decreased over five points and compared with the benchmark period of the fourth quarter of 2010, it is down over 65 points.

  • The Real Estate Distress Research Index was 20.83 for the fourth quarter of 2022. The Real Estate Index increased nearly one point since the last quarter. Compared with the same period one year ago, the Index is slightly higher and compared with the benchmark period of the fourth quarter of 2010, it is down nearly 80 points.

  • The Health Care Services Distress Research Index was 125.00 for the fourth quarter of 2022. The Health Care Index decreased over 61 points since the last quarter. Compared with the same period one year ago, the Index has decreased over 71 points and compared with the benchmark period of the fourth quarter of 2010, it is up 25 points.

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.

About Polsinelli

Polsinelli is an Am Law 100 firm with more than 1,000 attorneys in 23 offices nationwide. Recognized as one of the top firms for excellent client service and client relationships, Polsinelli is committed on meeting our clients’ expectations of what a law firm should be. Our attorneys provide value through practical legal counsel infused with business insight with a focus on health care, real estate, finance, technology, private equity, and corporate transactions. Polsinelli LLP in California, Polsinelli PC (Inc) in Florida.

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