• Tue. Apr 23rd, 2024

Record-Breaking Business Bankruptcies: What Factors are Contributing to the Surge in Filings?

BySamantha Nguyen

Apr 3, 2024
Increase in Business Bankruptcies as Slow Decline Transforms into Rapid Failure

In recent years, bankruptcy has become a common occurrence for businesses of all sizes. This week has been one of the busiest three-day periods for major corporate bankruptcies on record, with data compiled by Bloomberg showing a significant increase in filings. The trend of increasing bankruptcies, including consumer, small business, and big corporates, has been steadily climbing over the past 20 months.

The surge in bankruptcy filings has been attributed to several factors, including higher interest rates and a decrease in consumer spending. According to Michael Hunter, vice president at Epiq, the trend is expected to continue throughout the year as commercial insolvencies see a significant jump of 43% in the first three months of 2024 compared to the same quarter the previous year.

Despite the increase in business bankruptcies, bankruptcy lawyer Derek Abbott notes that this doesn’t necessarily indicate broader economic trouble. He has seen a rise in restructuring work in recent months, even as the US economy avoided predictions of a recession when the Federal Reserve increased interest rates. Abbott highlights that certain sectors such as telecom, retail, and pharmaceutical are facing challenges that contribute to the rise in bankruptcy cases.

Pre-bankruptcy deal-making has also become more common among companies seeking restructuring, with the goal of reducing costs and the time required under court supervision. Nine companies have filed big Chapter 11 cases since Sunday, including two telecommunication and two pharmaceutical companies. Interestingly, five of these cases were filed in Delaware, a main hub for restructuring cases due to the high number of companies incorporated there.

In conclusion, while bankruptcy can often feel like it happens slowly then all at once for businesses of all sizes

By Samantha Nguyen

As a content writer at newsqwe.com, I am passionate about crafting engaging and informative articles that captivate our audience. With a background in journalism and a keen eye for detail, I strive to deliver content that is not only well-researched but also adds value to our readers' lives. From breaking news stories to in-depth features, I take pride in my ability to tell compelling stories that resonate with our diverse audience. When I'm not typing away at my keyboard, you can find me exploring new cafes, practicing yoga, or getting lost in a good book. I am thrilled to be a part of the newsqwe.com team and look forward to sharing my love for writing with all of our readers.

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