Grounded in Oz: Airliner Virgin Australia Holdings Ltd entered into voluntary administration and later Chapter 11 bankruptcy, as the company succumbed to an overwhelming debt load.
The company thus has become Asia’s first airline to fall to the coronavirus after the outbreak deprived the debt-burdened company of almost all income. Still, it was not without extreme bankruptcy risk even before the pandemic hit. Observe the FRISK® score's reading of Virgin Australia:
The FRISK® score, which blends stock market volatility data, bond agency ratings, financial ratios and crowdsourced click patterns from CreditRiskMonitor subscribers, has proven to be 96% accurate in predicting public company bankruptcy within a 12-month time horizon. Thus, our subscribers with Virgin Australia in their portfolios would have been tipped off well in advance - for more than a year - that the company was at heightened risk of failure and would have had the opportunity to adjust their exposure level accordingly.
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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
- Bond agency ratings from Fitch, Moody's, and DBRS Morningstar
- 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, bond agency ratings from Moody’s, Fitch and DBRS, 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.