Which industries will have the most bankruptcies/reorganizations?

The at risk areas are Energy, much of Consumer Discretionary, and Retail oriented REITs, and anything related to travel (by car, air or ship). The problems might be flowing back to the Banks as well.

Seekingalfa.com

Charles M. Tatelbaum is one of the most noted, and highly respected, bankruptcy attorneys in the United States

Mark: "Which industries will have the most bankruptcies/reorganizations? Which will have the fewest?"

Chuck's response:

"I will first give you the traditional lawyer answer to everything - "it depends". By that, I mean that we need to see the extent that the government's efforts at providing emergency assistance provide any significant degree of relief. There are anecdotal stories being circulated that some banks have refused to participate in the SBA lending program and others will only consider loans to existing clients of the bank. If it takes too long or it is too difficult to obtain the loans, then the bankruptcy filings can increase greatly.

As for bankruptcies and reorganizations, I also need to state that there will be many, many business failures which will not lead to formal bankruptcy or reorganization filings, as the business owners will simply quit and "turn over the keys" to the lenders or landlords. This will not be industry specific. This will be especially true for small neighborhood ("main street") businesses. The owners will also have guaranteed any lending debt, and they, as individuals, will need bankruptcy relief.

Where there are businesses that have a lot of leverage and bond debt, we will see a greater percentage of bankruptcy filings than "walk away", since the lenders will fight with each other over the value of the assets or the business, similar to the when in the jungle the hyenas fight over the remains to the dead wildebeest. Those that are "too big to fail" will need reorganization relief.

One more generality - the more financial leverage there is, the more that reorganization will be needed.

As to business sectors, I believe the energy sector will have the most filings (by percentage). With the price of oil being what it is, and with a tremendous oversupply on hand, where the cost of production is much higher than the foreseeable product selling price, where demand has ebbed, and with an industry that is one of the highest leveraged with debt, the frackers, drillers, refiners, oil field suppliers and the peripheral vendors of goods and services will need the reorganization/bankruptcy relief (the bankruptcy domino effect).

I suspect that retail (sellers of non-essential goods) that are large in scope will see a lot of reorganization filings. They will need much more time after the pandemic subsides before the public will be ready to part with scarce cash in order to purchase non-essential goods. Their debt structure and fixed overhead is usually large, and even with landlord and lender forbearance, they will have a great percentage of reorganization filings in order to shed non-profitable locations.

This will, in turn, create a large number of reorganizations for commercial retail landlords (large and small) when chunks of small or large shopping centers are left with vacancies and no prospect of filling the closed store locations and where lender debt relief will need to be forced through the bankruptcy process.

I think that the parts of the travel/hospitality area (except those selected for specific relief such as cruise lines and airlines) will need the bankruptcy relief. Hotels and daily car rentals for example have large amounts of public and private debt, and they currently have no viable prospect for revenue generation for either overhead or debt service in the foreseeable future.

I believe the same may be true for the motor vehicle (autos, trucks and RVs) retail sector. The lenders have already shown a willingness to ease interest and principal reductions for the large inventories on hand, and whether there will be a need for a large amount of reorganizations may depend on how far the lenders are able to forbear, as the appetite for consumer purchases/leases will be tepid after some degree of normalcy returns.

Lastly (for now), I think that the non-urban health care (hospitals and clinics) industry will need major reorganization relief. There has not been much publicity about this, but even before the pandemic, the lack of adequate health insurance, the lack of prompt (or any) reimbursement from Medicare and Medicaid, and the increasing costs had put this "industry" in jeopardy. The pandemic will exacerbate the existing financial illnesses, and there is usually no way to obtain new or increased debt relief.