Several more bankruptcies to report this week - Skybus, Frontier Airlines, and Linens n’ Things.

I’m a week behind on Skybus (a friend pointed that out to me); but in my defense, Skybus was a tiny operator that had been in business for less than one year (see Skybus Airlines Files for Bankruptcy). Although Frontier Airlines was considerably larger and more established than Skybus, their business models were similar - both low cost, short-haul operations. Now Frontier is similar to Skybus in another way - it too has gone the way of the Dodo (see Frontier Airlines Files for Bankruptcy Protection).

The most impressive bankruptcy of recent vintage (Bear Stearns aside) has to be Linens n’ Things. Should it file for bankruptcy tomorrow as expected (see Linens n’ Things Weighing Bankruptcy), it would represent the most consequential bankruptcy so far this year. Linens n’ Things is not only a household name, but it received a fair amount of notoriety when it became a portfolio company of the private equity firm Apollo Management (see Apollo Struggles to Keep Debt from Sinking Linens n’ Things).

So this makes the new running list of notable 2008 bankruptcies:

• Wickes Furniture (retail)
• Sharper Image (retail)
• Lillian Vernon (retail)
• Sirva (moving services)
• Blue Water Holdings (auto)
• Buffets Holdings (restaurants)
• Aloha Airlines (airline)
• Bear Stearns (banking)****
• The Education Resource Institute (insurance)
• ATA (airline)
• Skybus (airline)
• Frontier Airlines (airline)
• Linens n’ Things (retail)

This list is threatening to get long enough for me to create a separate graphic.

Separately, I have to say, I’ve been somewhat troubled by this recession so far, and the bankruptcies that have accompanied it. Although bankruptcies and recessions go hand in hand, I cannot remember the last time so many well-known names had disappeared so quickly. Sure, the post dotcom recession brought us many a flop. Data from Bankruptcydata.com reveal that there were 289 bankruptcies in 2000 and 383 in 2001, …far more on a SAAR than this year’s 53. But what’s different to me about this recession is that unlike the dotcom era, many of these businesses were viable at one time, certainly much more so than firms like Pets.com or Webvan, …remember them??

And in an additional piece of corroboratory information, I had a conversation with the CEO of a turnaround/restructuring company this weekend who confirmed my worst fears - that this year has been terrible thus far, and is threating to become downright awful. As I’ve discussed on this blog before, he seemed to agree that firms are getting hit pretty hard on both sides of the ledger - on the supply side by financial institutions that abruptly cutoff access to money and credit, and on the demand side by a seriously impaired consumer, whose purchases seem to be falling off a precipice. He told me that this recession feels worse than any he can recall in his 29 year history in the industry. Moreover, he mentioned that he hadn’t been this busy since at least 1992.

He obviously wasn’t complaining. Business for them is going gangbusters.

Although I wish him well as a friend, I hope things don’t go as well for him as he expects, or as I fear they might. Is that bad to say???

This entry was posted on Monday, April 14th, 2008 at 8:29 pm and is filed under Bankruptcies, Corporate Strategy. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.