A popular technology solutions provider to the energy sector, Houston-based McDermott International, Inc. has met Chapter 11 bankruptcy - a fate which wouldn't have surprised vigilant CreditRiskMonitor subscribers.
After all, the company had been firmly entrenched in the FRISK® score "red zone" for more than a year's time:
This Bankruptcy Case Study drills deep into why McDermott International was not able to stave off bankruptcy. In 2018, the company combined its offshore engineering and construction business with Chicago Bridge & Iron (CB&I) and its liabilities jumped to $7.86 billion at the end of June 2018, from $1.36 billion in the previous quarter. It had total debt of $4.32 billion as of November 2019.
McDermott International also said it was being investigated by the SEC over projected loss disclosures. The company also faces a probe from the U.S. Department of Justice over allegedly fraudulent invoices at a Department of Energy project in South Carolina that is linked to CB&I.
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Our FRISK® score model incorporates four powerful risk inputs:
- “Merton”-type model of stock market capitalization and volatility
- Financial ratios, including those used in the Altman Z”-Score Model
- Agency ratings
- Website click pattern data from CreditRiskMonitor® subscribers, representing key credit decision-makers at nearly 40% of current Fortune 1000 companies plus thousands of other large companies worldwide
Since the start of 2017, the FRISK® score’s rate of success in capturing public company bankruptcy is 96%. In any given year, you can count on one hand the times we miss – and in those outlier cases, the circumstances deal with unusual, unforeseen events such as natural disasters and CEO fraud.
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About Bankruptcy Case Studies
CreditRiskMonitor® Bankruptcy Case Studies provide post-filing analyses of public company bankruptcies. Our case studies educate subscribers about methods they can apply to assess bankruptcy risk using our proprietary FRISK® score, robust financial database, and timely news alerts.
In nearly every case, a low FRISK® score gave our subscribers early warning of financial distress within a one-year time horizon. Our proprietary FRISK® score predicts bankruptcy risk at public companies with 96% accuracy. The score is formulated by a number of indicators including stock market capitalization and volatility, financial ratios, agency ratings, and crowdsourced behavioral data from a subscriber group that includes nearly 40% of the Fortune 1000 and thousands more worldwide.
Whether you are new to credit analysis or have decades of experience under your belt, CreditRiskMonitor® Bankruptcy Case Studies offer unique insights into the business and financial decline that precedes bankruptcy.