35 Bankruptcy Deals and Counting in 2009

The ComVest Group has struck its second deal to acquire a company out of bankruptcy this month. This time it will exchange its debt holdings in Velocity Express for a majority ownership position through a prepackaged Chapter 11 bankruptcy and 363 sale. Velocity Express provides regional, time-definite, same-day delivery services throughout the U.S. and said its revenues dropped 35% as its customers cut back on shipping expenses. ComVest earlier this month struck a deal to acquire bankrupt Cynergy Data for $81 million.

So far in 2009, there have been 35 completed or announced acquisitions of bankrupt companies by private equity investors, according to the PitchBook Platform. Almost $4 billion in capital has been invested in the companies, with a median deal amount of $94.9 million. The largest deal was Ripplewood Holdings' $724 million acquisition of Interstate Bakeries. As the weak economy continues to re-stabilize, this number will likely continue to grow, as private equity is one of the few, if not the only, investor classes capable of providing this amount of capital to distressed and bankrupt companies.