Death Watch

The bailout drama playing out in Washington and New York has implications far beyond the banks and investment firms that were rocked by bad bets on risky investments.

Businesses small and large are having a hard time getting the credit they need to finance operations, equipment and expansion. To help track the impact of the crisis, BailoutSleuth is creating a "Death Watch" section devoted to companies that have gone out of business because of the credit squeeze or appear to be imperiled by it.

Gainey Corp., a trucking company in Grand Rapids, Mich., sought bankruptcy protection this week. The company blamed the filing on the credit crunch, saying efforts to negotiate with its lenders were met with a "series of increasingly aggressive actions.''

Wachovia Corp., one of the banks hit hardest by the financial crisis, sued Gainey in late September, seeking the repayment of some $238 million remaining on a loan the company took out in 2006. It asked that a receiver be appointed to liquidate the company, which has about 2,000 workers.

Wells Fargo & Co. agreed earlier this month to buy Wachovia for $15 billion, after the Federal Deposit Insurance Corp. sought to broker a deal for the troubled bank. 

Another company, Linens 'n Things Inc., said Tuesday that it would liquidate after a scheduled auction of its assets produced no buyers. The retailer, which is based in Clifton, N.J., was taken private in a leveraged buyout two years ago. It filed a Chapter 11 bankruptcy petition in May, in part because the slumping housing market cut into sales and exacerbated other problems.

Linens 'n Things had developed a reorganization plan. When credit became scarcer, it decided to sell its 371 remaining stores. No one beyond the original "stalking horse'' bidder came forward. Analysts said it was unlikely that potential buyers would have been able to line up financing for the deal.

Linens 'n Things employed more than 17,000 people at the start of this year.

The economic upheaval claimed its first financial-services victim in Japan last week, when Yamato Life Insurance filed for bankruptcy. Yamato cited a decline in the value of its investment holdings. It listed debts of roughly $2.6 billion.

Real estate developers across the United States have been hit hard by the credit crunch, and industry analysts say that some big commercial property companies may have to seek bankruptcy protection if they are unable to sell assets or refinance looming debts.

Car dealers also are under intense pressure, because of declining demand and the unwillingness of some lenders to extend credit for vehicle inventory and customer purchases. Bill Heard Enterprises, the nation's biggest Chevrolet dealer, shut down its 13 dealerships on Sept. 24 and laid off 2,700 workers.

BailoutSleuth intends to compile a list of notable companies that have gone out of business or filed for bankruptcy as a result of the credit crisis. Our list also will include companies that have suffered significant setbacks because of a loss or decline in funding -- especially those who relied heavily on the banks or investment firms at the heart of the crisis.

If you know of any companies that should be included on the list, or considered for it, please send the details to Chris Carey at chris@sharesleuth.com.