How to get a list of companies in trouble

In some cases it is interesting to investigate companies that have gone bankrupt or are in liquidation. For example: it may be interesting to have a look at the accounting report section of the annual report to see if there is a going concern paragraph in the years prior to company going bankrupt. Or it may be interesting to look at different financial items from the profit-los account or balance sheet, for instance the leverage ratio. The diference between both types of status are as follows:

Bankruptcy is a legal status of a person or other entity that cannot repay the debts it owes to creditors. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor.” (Wikipedia)

Liquidation is the process by which a company (or part of a company) is brought to an end, and the assets and property of the company are redistributed. Liquidation is also sometimes referred to as winding-up or dissolution.” (Wikipedia)

Some databases offer variables that allow you to select these types of companies. In the European database Amadeus there is the option in the search Menu called Status. Clicking the option in the Menu allows you to select companies of this type. See example:

Compustat alo offers a variable that indicates whether a company is in trouble: Bankruptcy or Liquidation. The variable that indicates this is:

  •  STALT in the Fundamental Annual database (both Global and North America)
  •  STALTQ in the Fundamental quarterly database (both Global and North America).

For a company in trouble the variable will give as output: TL. See example:

Other financial databases may also include this type of information on a company. If you can not immediately ind it, try looking for variables with terms in the name like: status, active, inactive, bankrupt/bankruptcy, (in) liquidation.


%d bloggers like this: