GCL — financial distress indicators
Financial-health summary
GCL's reported numbers place it in the 'Weak' financial-health band (distress score 50/100). The main indicators are market-implied default probability >20%, thin interest coverage and ohlson o-score signals likely failure. Independently, the Ohlson accounting model puts its 1-year failure probability at 80% and the market-implied (Merton) default probability is 48.7%. In its favour: revenue still growing (+46% yoy).
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 0.03 σ → PD 49%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
Interest coverage is only 1.43× (lenders typically require ≥ 2–3×).
Low coverage leaves little buffer against a profit dip before a debt-service or covenant breach.
O-score 1.41 → model probability 80%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Last price $0.78.
Below the $1 minimum-bid listing standard (Nasdaq Rule 5550(a)(2) / NYSE 802.01C); sustained breach leads to delisting and loss of capital-market access.
Price is -71% from its 52-week high.
For financial firms a share-price run often precedes a deposit or funding run (confidence channel).
Operating cash flow negative in 2 of the last 3 years. The company is profitable, so this likely reflects working-capital or loan-book growth.
A business that cannot fund itself from operations depends on external capital to survive.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Revenue still growing (+46% YoY).
- High insider/promoter ownership (71%) aligns management with survival.
📰 Recent news scan
- GCL Global (NASDAQ:GCL) Shares Up 0.5% - Still a Buy? - MarketBeatGoogle News · 2026-10-08
- GCL Global Holdings Ltd Ordinary Shares (NASDAQ: GCL) Stock Price, News & Analysis - KalkineGoogle News · 2026-10-07
- GCL Global Holdings Transfers Listing to Nasdaq Capital Market After Bid-Price Warning - The Globe and MailGoogle News · 2026-09-18
- Shares keep trading without interruption as GCL gets until March 15, 2027 to meet Nasdaq's price rule. - Stock TitanGoogle News · 2026-09-17
- GCL Announces $10 Million Share Repurchase Program - Yahoo FinanceGoogle News · 2026-08-28
- GCL Global Holdings Ltd. (GCL) Stock Falls on Q4 2026 Earnings - Quiver QuantitativeGoogle News · 2026-07-31
⚖️ 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 GCL's financial-health indicators show?
As of 2026-10-08, GCL's public financial data places it in the 'Weak' band with a distress score of 50/100, driven by market-implied default probability >20%, thin interest coverage and ohlson o-score signals likely failure. 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 GCL's financial distress score?
50/100 ('Weak'). Ohlson O-score 1.41 (model 1-year failure probability 80%). Merton distance-to-default 0.03 σ (model default probability 48.7%).
What works in GCL's favour?
Revenue still growing (+46% YoY). High insider/promoter ownership (71%) aligns management with survival.
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.
Other Unclassified companies with distress indicators
- CNEY (CNEY)Very weak 100/100
- EPOW (EPOW)Very weak 100/100
- GIBO (GIBO)Very weak 100/100
- GNS (GNS)Very weak 100/100
- HKPD (HKPD)Very weak 100/100
- HUBC (HUBC)Very weak 100/100
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.