The Year In Bankruptcy: 2016

The watchword for 2016 in much of the world was "upheaval." Two unanticipated events dominated the political, business, and financial headlines of 2016, at least in Europe and the Americas: the Brexit referendum result and the election of Donald J .Trump as the 45th President of the United States. The refugee crisis, the commodities meltdown, Brazil's economic collapse, China's growing pains, Russian belligerency and alleged cyber-meddling in the U.S. election, the war on terrorism, and the beginning of the end of the bloody Syrian civil war seemed to pale by comparison.

Another Good Year for the U.S.

All things considered, 2016 was another good year for the U.S., with modest growth in the economy (approximately 2 percent); only a slight increase in the fiscal-year budget deficit ($587 billion); persistently low inflation (approximately 1.7 percent); a strong dollar (at a 14-year high compared to most major currencies); and, until it increased slightly at the end of December to 4.7 percent, the lowest unemployment rate since August 2007. These developments prompted the U.S. Federal Reserve on December 14 to raise its benchmark interest rate for the second time since December 2008.

A gold star for 2016 went to the U.S. auto industry. Seven years after Big Three automakers General Motors and Chrysler filed for chapter 11 protection with a decidedly bleak outlook, U.S. automakers had another banner year—U.S. light-vehicle sales hit a second consecutive annual high, assisted by a fourth-quarter surge in demand that exceeded expectations and bolstered the outlook for an industry that has been a key engine for economic growth.

Commodities and the Shipping News

The other big stories in the turbulent business, financial, and economic narrative of 2016 included a continuing commodities meltdown precipitated by weak demand (principally from China) and, until the Organization of the Petroleum Exporting Countries (OPEC) finally agreed to slash oil production in November, rock-bottom prices for oil, gas, coal, and minerals, all of which sent hundreds of overleveraged U.S. and foreign producers and related companies scrambling down the road to bankruptcy. The year ended on a good note for oil producers. After plummeting to a 12-year low in January, the price of crude oil rebounded more than 50 percent by year-end.

Years of spending on bigger and bigger state-of-the art container ships and of rock-bottom spot cargo rates took a heavy toll on the shipping industry in 2016. In January, Hyundai Merchant Marine negotiated an almost unprecedented reduction in daily hire rates for long-term charters as part of the South Korean carrier's restructuring. Hanjin Shipping collapsed under a mountain of debt and was forced to apply for court receivership at the end of August, leaving 100 ships and $12 billion in goods stranded around the world. Even industry-leading Maersk Line saw its profit from 2015, which had totaled $1.3 billion, reverse into a loss in 2016. Turmoil in the industry...