Brookfield Business Corporation — financial distress indicators
Financial-health summary
Brookfield Business Corporation's reported numbers place it in the 'Watch' financial-health band (distress score 42/100). The main indicators are market-implied default probability >20%, revenue collapse and very high leverage. Independently, the Ohlson accounting model puts its 1-year failure probability at 35% and the market-implied (Merton) default probability is 52.3%. In its favour: operating cash flow is positive over the latest 12 months.
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Merton distance-to-default -0.06 σ → PD 52%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
Revenue changed -32% year over year.
A >30% sales drop typically breaches leverage covenants and starves fixed-cost coverage.
Total debt is 6.3× EBITDA.
Debt above ~6× EBITDA is deep sub-investment-grade territory; refinancing becomes difficult when rates or earnings move against the company.
Revenue declined every year for three years.
Structural, not cyclical, decline.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Operating cash flow is positive over the latest 12 months.
📰 Recent news scan
- How Maria 'The Sun Queen' Telkes Powered Solar Energy StorageYahoo Finance · 2026-10-08
- Brookfield Business Corporation to Host Third Quarter 2026 Results Conference CallYahoo Finance · 2026-10-06
- Brookfield Business (TSX:BBUC) Rebound Hopes Meet A Fair Value Reality CheckYahoo Finance · 2026-09-28
- Brookfield Business (BBUC) Joins Reliance Deal. What Returns Can it Capture?Yahoo Finance · 2026-09-20
- Brookfield Business Corporation Announces Renewal of Normal Course Issuer BidYahoo Finance · 2026-08-14
- Is the Options Market Predicting a Spike in Brookfield Business Partners Stock?Yahoo Finance · 2026-08-13
⚖️ U.S. legal pathway — Title 11, U.S. Code
Which chapter would apply?
- Chapter 11 — reorganisation. Management usually stays in control as debtor-in-possession; the automatic stay (§362) halts collection; a plan must meet the best-interests test (§1129(a)(7)) and the absolute priority rule (§1129(b)) — creditors are paid before shareholders, who are frequently wiped out.
- Chapter 7 — liquidation. A trustee sells assets and distributes proceeds by statutory priority (§§507, 726).
- Subchapter V (“Chapter 5”) is a fast track for small-business debtors under a statutory debt cap, but SEC-reporting companies are excluded (§101(51D)) — so it rarely applies to listed companies.
What typically triggers a filing
- Payment default or covenant breach lenders will not waive; a debt maturity that cannot be refinanced.
- Auditor going-concern doubt (ASC 205-40 / PCAOB AS 2415) — often itself a default trigger in loan agreements.
- Creditors can force a case with an involuntary petition (§303) if debts are not paid as they come due.
- Delisting after sustained sub-$1 prices or equity deficits cuts off equity funding.
Transactions shortly before filing can be clawed back (preferences — 90 days, §547; fraudulent transfers — 2 years, §548).
Frequently asked questions
What do Brookfield Business Corporation's financial-health indicators show?
As of 2026-10-08, Brookfield Business Corporation's public financial data places it in the 'Watch' band with a distress score of 42/100, driven by market-implied default probability >20%, revenue collapse and very high leverage. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is Brookfield Business Corporation's financial distress score?
42/100 ('Watch'). Ohlson O-score -0.63 (model 1-year failure probability 35%). Merton distance-to-default -0.06 σ (model default probability 52.3%).
What works in Brookfield Business Corporation's favour?
Operating cash flow is positive over the latest 12 months.
How are shareholders treated if a company enters insolvency?
In a Chapter 11 reorganisation the absolute priority rule pays secured lenders, then unsecured creditors, before shareholders — so existing shares are usually cancelled or heavily diluted. In Chapter 7 the company is liquidated and shareholders rarely recover anything.
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Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.