Saturday, December 5, 2020

Tag: Consumers and Businesses Buckle under their Debts

Consumers and Businesses Buckle under their Debts

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by Wolf Richter, Wolf Street:
Bankruptcies surge as the “credit cycle” exacts its pound of flesh.

Commercial Chapter 11 bankruptcies – an effort to restructure the business, rather than liquidating it – jumped 16{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} year-over-year in June to 581 filings across the US. Total commercial bankruptcies of all types, by large corporations to tiny sole proprietorships, rose 2{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} year-over-year to 3,385 filings, according to the American Bankruptcy Institute. This was up 39{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} from June 2015 and up 18{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} from June 2014.

Commercial bankruptcies topped out at 9,004 in March 2010. By that time, credit conditions had been easing for a year, and liquidity was chasing yield. Not much later, even zombie companies – if they were large enough – were able to refinance their debts and borrow more to fund their operations and keep creditors happy. Bankruptcies fell sharply: In September 2015, they bottomed out at 2,217 filings.