Prospect News reports two new defaults for week of July 26 to Aug. 8

By Jim Witters

Wilmington, Del., Aug. 10 - Prospect News reported two new defaults for the week of July 26 through Aug. 8.

K-V Pharmaceutical Co. filed for Chapter 11 bankruptcy protection on Aug. 4. The city of San Bernardino, Calif., filed for Chapter 9 bankruptcy on Aug. 1.

The two defaults brings the 2012 total reported by Prospect News to 93.

Of those, 54 were Chapter 11 filings, eight each stemmed from missed interest payments and distressed exchanges, five resulted from missed principal payments, four each were from Chapter 15 bankruptcy filings and Companies' Creditors Arrangement Act filings, one each stemmed from missed principal and interest payments, corporate debt restructuring, examinership, insolvency, administration, notices of default and acceleration, reorganization, Chapter 7 bankruptcy filings and two were Chapter 9 bankruptcy filings.

Meanwhile, Standard & Poor's reported one new default for the week, bringing its 2012 total to 49.

U.S.-based ethanol producer Aventine Renewable Energy Holdings Inc. defaulted after its lenders agreed to a debt forbearance that allowed the company to miss an interest payment on its $225 million term loan agreement, according to Standard & Poor's.

By region, 27 of the 49 defaulters were based in the United States, with 13 based in the emerging markets, six in Europe, and three in the other developed region (Australia, Canada, Japan and New Zealand). In comparison, the 2011 total (through Aug. 1) was 23: 14 defaulters in the U.S., two in the emerging markets, two in Europe and five in the other developed region, Standard & Poor's reported.

So far this year, missed payments accounted for 13 defaults, bankruptcy filings accounted for 13, distressed exchanges accounted for 10, and eight defaulters were confidential.

The remaining five entities defaulted for various other reasons (see table 3). In 2011, 21 issuers defaulted because of missed interest or principal payments and 13 because of bankruptcy filings - both of which were among the top reasons for defaults in 2010. Distressed exchanges - another top reason for default in 2010 - followed with 11 defaults in 2011.

Of the remaining defaults, two issuers failed to finalize refinancing on bank loans, two were subject to regulatory action, one had its banking license revoked by its country's central bank, one was appointed a receiver, and two were confidential, Standard & Poor's reported.

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