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Looks like the gloom of the global markets could persist if they continue to take their cue from the negative forecast of the American economy and woeful performance of the U.S. stock markets. A 75-basis point Federal Reserve cut announcement Tuesday morning before markets opened gave no lift to the Dow and the Nasdaq. In midday trading, the Dow (-146.08, or -1.12%, to 11,963.22) and Nasdaq (-47.34, or -2.02%, to 2,292.68) was a sea of red amid continued signs of weakness such as more bad earnings reports and now a spate of noteable bankruptcy filings from restuarant chain Buffets Holdings Inc., commercial printer Quebecor World Inc. [IQW] and furniture company Domain Inc.
The biggest bankruptcy of note was Montreal-based Quebecor's plans to file for creditor protection blaming industry competition, its failure to raise new capital as well as its inability to sell its European operations. The company also said Monday it has secured $1 billion in new financing from Credit Suisse Group and Morgan Stanley. Last week, Quebecor failed to make a $19.5 million interest payment. The company has been struggling with a downturn in the printing market, especially in its home base of Canada, tallying a debt load of $2.24 billion in the 2007 third quarter. Meanwhile, privately held Buffets has an upset stomach as the Egan, Minn.-based company announced it filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court in the District of Delaware. The company secured a $385 million debtor-in-possession financing facility and said it has obligations that include a $640 million prepetition credit facility and a $300 million 12.5% senior notes due Nov. 1, 2014. Intending to restructure, the company, known for its steak buffet, will keep its 626 restaurants in 39 states open. Struggling with lagging sales as the housing market crumbled and the inability to find fresh capital to sustain its business, privately held upscale furniture retailer Domain also filed for Chapter 11 Tuesday -- only seven months after a buyout. The 200-employee company's 27 locations will remain open and will most likely find a buyer or liquidate its inventory. The Norwood, Mass.-based company has been negatively impacted by competition from cheaper products from China. Domain follows the foot steps of fellow furniture retailers Levitz Furniture Inc. and Bombay Co., which both filed for Chapter 11 last year. Domain, which was founded in 1985, was acquired in June by Synergy Enterprises LLC, a New Jersey private investment firm, from Britain's AGA Foodservices Group plc. According to TheDeal.com's Bankruptcy Insider database, 99 bankruptcy filings have been made so far in 2008 alone -- which is actually less than last year's 125 filings in January -- but as the U.S. economy slows down, look for Chapter 11 filings to accelerate. - Gerald Magpily TheDeal.com: Quebecor World gains protection TheDeal.com: Levitz falls in Chapt. 11 again Categories Deal Video
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