When it comes to corporate bankruptcies, last year was ominously quiet outside the financial sector. Get ready for the storm.

In the first couple weeks of 2009, chemical company LyondellBasell on Jan. 6 filed for bankruptcy reorganization, followed by another chemical maker, Tronox, on Jan. 11. Telecom equipment provider Nortel Networks additionally sought protection from its creditors with a bankruptcy filing on Jan. 15.

Some bankrupt companies are being forced to take the next step as the funding needed to reorganize their businesses proves difficult, whether not impossible, to come by. Circuit City filed for bankruptcy last year, but on Jan. 16 the electronics retailer said it would liquidate all 567 of its U.S. stores.

Not poor — Yet

The largest bankruptcy of 2008 was the break down of investment bank Lehman Brothers and its nearly $700 billion in assets. But other than Lehman, 2008 was relatively quiet for bankruptcies.

According to BankruptcyData.com, 136 public companies filed for bankruptcy in 2008. That’s more than in recent years, but — despite more than a year of a U.S. recession and worldwide credit crisis — the tally is only the sixth worst in the past decade.

Edward Altman, a leading expert on bankruptcy who is a professor at the New York University Stern School of Business, estimates the 2008 default rate — a measure that includes both bankruptcies and other credit troubles at corporations — was 4.5 percent, just one point higher than the historic average.

Comes the Deluge

By contrast, Altman expects the default rate to jump to the double digits in 2009 and 2010.

Other bankruptcy experts agree that bankruptcy filings are set to skyrocket. Bankruptcies often have a delayed reaction to economic and financial difficulties.

Many troubled firms continue to subsist on easy credit terms obtained before the credit crisis began. “There have been a lot of companies hanging on…

[Source] dhiram