In light of the continued favorable business climate and ample liquidity in the U.S., the falloff in business bankruptcy filings in 2006 should come as no big surprise. Unlike 2005, which added three new stars to the all-time hit parade of chapter 11 “mega” cases, 2006 saw no new additions to the Top 10 list for public-company chapter 11 filings. Overall, the number of business bankruptcy filings dropped 20 percent in fiscal year 2006, the fifth straight year a decline was reported, according to statistics released by the Administrative Office of the U.S. Courts in October of 2006. Only 27,333 businesses sought bankruptcy protection for the fiscal year ending September 30, 2006, compared with 34,222 in fiscal year 2005. Of those, the number of chapter 11 cases fell from 6,637 to 6,003. Public business bankruptcy filings fell to a 25-year low in 2006. Sixty-six public companies filed for bankruptcy protection in 2006, the lowest number of filings since 1980, when 62 public companies filed for bankruptcy.

Even so, 2006 saw a handful of notable billion-dollar chapter 11 cases. Two of the Top 10 chapter 11 filings in 2006 involved automobile-parts suppliers, adding another grim chapter to the continuing saga of an industry that has been slammed by declining market share, overcapacity, and high labor costs. Toledo, Ohio-based Dana Corp., a key supplier of axles, brakes, and truck frames to Detroit automakers, filed for chapter 11 protection in March of 2006, citing its customers’ shrinking market share (a quarter of Dana’s revenue comes from Ford) and higher costs of raw materials and energy. Listing more than $9 billion in assets, Dana’s chapter 11 case was the largest bankruptcy filing of 2006.

Components supplier DURA Automotive Systems Inc., together with its U.S. and Canadian subsidiaries, filed for chapter 1 1 protection at the end of October 2006, blaming the decision on an accelerating deterioration of the North American automotive industry, including escalating raw-materials costs. DURA’s filing was the third-largest in 2006, the company listing more than $2 billion in assets. Bankruptcy filings by Dana and DURA follow those of, among others, Tower Automotive, Collins & Aikman Corp., and Delphi Corp., the last of which is the largest U.S. auto-parts supplier. Six of the 20 largest North America-based auto-parts suppliers are trying to reorganize their finances in bankruptcy. At least 36 U.S. auto-parts suppliers have filed for bankruptcy since 1999, including eight in 2006.

Coming in at No. 2 on the Top 10 public chapter 11 filing hit parade for 2006 was Sea Containers Ltd., the London- and Bermuda-based shipping and railroad company. Blaming higher fuel prices and fallout from the July 2005 London terrorist bombings, the company filed for chapter 11 protection on October 15, 2006, after failing to make a scheduled $1 15 million debt payment. Sea Containers listed nearly $2.75 billion in assets at the time of its bankruptcy filing. The fourth-largest public chapter 11 case of 2006 was filed by Satelites Mexicanos S.A. de C.V. The Mexican satellite services company filed a chapter 11 petition on August 11, 2006, after finalizing the terms of a pre-negotiated chapter 11 plan with noteholders who had filed an involuntary bankruptcy case against the company in 2005 that was subsequently dismissed in favor of a Mexican insolvency proceeding and a companion U.S. ancillary proceeding under section 304 of the Bankruptcy Code. Plagued by financial woes dating back as far as 2001, when it was battered by an economic downturn in Mexico and the U.S. that severely cut into demand for its telecommunications services, Satelites Mexicanos listed approximately $925 million in assets at the time of its bankruptcy filing.

Spot No. 5 on the Top 10 list for 2006 went to Pliant Corporation. The Schaumburg, Illinois-based packaging company filed for chapter 11 on January 3, 2006, citing severe increases in resin prices and tightening of trade terms with key suppliers as the reason for the filing. Pliant listed total assets of $777 million and total debts of nearly $1.2 billion. Orthodontic Centers of America Inc., a Metairie, Louisianabased provider of business services to orthodontic and dental practices worldwide, filed a chapter 11 petition on March 14, 2006. OCA cited the need to protect its contractual relationship with its affiliated practices and to provide necessary “breathing room” to restructure its balance sheet and operations as the reason for seeking chapter 11 protection. At the time of the filing, the company listed more than $660 million in assets. The case was the sixth-largest public chapter 11 case filed in 2006.

The seventh-largest chapter 11 case in 2006 was filed by Silicon Graphics, Inc., which sought bankruptcy protection on May 8, 2006, after pre-negotiating a plan of reorganization with its bondholders under which they agreed to swap their debt for a stake in the reorganized company. Silicon Graphics does high-end computer design and engineering work and manufactures supercomputers for clients such as NASA . Employing more than 1,800 people worldwide, the company listed assets of more than $450 million at the time of its bankruptcy filing.

Houston, Texas-based electrical contractor Integrated Electrical Services, Inc., and its subsidiaries filed for chapter 11 protection on February 14, 2006. Listing more than $416 million in assets, the companies’ filings were the eighth-largest of 2006. Rounding out the Top 10 public chapter 11 filings in 2006 were cases filed by Granite Broadcasting Corp., an operator of 23 television stations throughout the U.S., which filed for chapter 11 protection on December 12, 2006, listing more than $405 million in assets, and Tulsa, Oklahoma-based designer and manufacturer of natural-gas turbine equipment Global Power Equipment Group, Inc., which filed a chapter 11 petition on September 28, 2006, listing more than $381 million in assets.

little reason for optimism in 2005, as major carriers Delta and Northwest scrambled for cover in chapter 11 in an effort to sort out their financial and operational problems. Provisions in sweeping pension reforms enacted in 2006 designed to give air carriers more time to fund shortfalls in their pension plans may also help the ailing industry get back on its feet. Still to be seen is the impact that the consolidation frenzy sparked in late 2006 by US Air’s hostile buyout bid for Delta will have on the industry in 2007 and beyond.