OREANDA-NEWS. Recovery rates were mixed for creditors of defaulting U.S. healthcare, food, beverage and consumer products companies, with issue recovery percentages dependent on the total reorganization or liquidation value and the company's overall capital structure mix, according to a new Fitch Ratings bankruptcy case study report.

The median multiples of reorganization enterprise value/forward EBITDA forecast for healthcare and pharmaceutical (HC) and food, beverage and consumer company (FBC) bankruptcy valuations were 6.8x and 6.1x, respectively. The median is modestly higher than the 5.8x average cross-sector enterprise value/EBITDA exit multiple in Fitch's bankruptcy case study database.

HC and FBC are comparatively non-cyclical, defensive sectors and have had below-average default rates. Accordingly, bankruptcy filings for the 30 cases analyzed in this edition of Fitch's recurring bankruptcy case study series were driven by company specific challenges that could not be overcome outside of bankruptcy in the face of already high leverage. There was no sector-wide distress as has been the case in certain commodity and technology sectors. Sector defaulters tended to be relatively small companies with limited diversity of products or services. Key drivers included adverse regulation, fraud, and weak operating performance.

Sector first-lien debt issues on average recovered 93% of par value and unsecured debt issues had a 49% recovery rate. There was wide dispersion of unsecured recoveries around the 49% mean.

The full report 'Case Studies in Healthcare, Food, Beverage and Consumer Bankruptcy Enterprise Value and Creditor Recoveries' is available at 'www.fitchratings.com' or by clicking on the link.