The cast of characters that make regular appearances in our coverage could be in for a shakeup this year, as a new list from credit rating agency Moody's indicates that a number of household names in the technology, media, retail, and automotive sectors could default on their debt. Palm, AMD, Freescale Semiconductor, Unisys, and Blockbuster are just a few of the names on Moody's "Bottom Rung" roster of the 283 US companies that are most likely to go bust. Moody's describes the members of this list, which also includes communications companies like Clearwire and retailers like Eddie Bauer, as having "high default risk and weak liquidity," and the agency suggests that up to 45 percent of these companies could default on their debt this year.
Of course, a default doesn't mean that these companies will go out of business, but it does mean, at a minimum, that their shareholders would be wiped out and bondholders will take a hit. If a company defaults but is able to secure financing for a bankruptcy, it can keep running without interruption while it reorganizes; only if the credit markets—which are actually tightening back up at the moment—were in such bad shape that no financing was available, would the company be forced into liquidation.
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