By Suhrith Parthasarathy
Feb 12 (Reuters) - Since the 2008 financial crisis,
companies have done little to improve their corporate
governance, according to an online survey of restructuring
professionals that was released today by the business advisory
The report canvassed 98 senior attorneys, investment
bankers, fund managers and other restructuring professionals
about changes in business practices since the recession.
More than half of the experts said that corporate governance
was unchanged from the recession, or had worsened. Those who
felt that standards had dipped cited the lack of liquidity
oversight as the main reason.
"Companies don't always realize they are running out of
cash. I think most companies focus on the income statement and
when you have an end-of-quarter surprise or disappointment, or
when something changes, you can be confronted with a lack of
liquidity," said Peter Fitzsimmons, president of the Americas at
"We would advise board members to consider the liquidity
elements of managing a business and not just the income
statement or the debt level," he said.
Overall, the experts surveyed said they expect the corporate
default rate to remain low for 2013, with half saying the rate
will be about the same as last year and 12 percent predicting it
One development the survey identified that could lead to an
increase in defaults in 2013 was a rise in interest rates. While
a clear majority of the respondents said they expect the prime
rate at the end of the year to remain where it is today, more
than a third (34 percent) expected at least a one-to-two-point
uptick by year end.
The survey also identified industries the experts felt were
most likely to face distress in 2013, including healthcare,
retail, and aerospace and defense.
The Affordable Care Act, which has created a lot of
uncertainty, is one of the reasons why the healthcare industry
could be under distress, said Fitzsimmons. He also said "the
industry is also going through a lot of change and has a higher
level of leverage now than it did historically."
As was the case last year, a majority of respondents
forecast a difficult period for highly leveraged private equity
Fifty-five percent expect to see a higher default rate among
private-equity portfolio companies in comparison to public
Prepackaged/prearranged bankruptcies will continue to be the
preferred format of bankruptcy filings, according to 95 percent
of the respondents.
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