Increase in Business Bankruptcies as Slow Decline Transforms into Rapid Failure

Bankruptcy filings have been steadily increasing over the past 20 months, with nine major companies filing big Chapter 11 cases in just three days this week. This trend has been attributed to a combination of factors, including higher interest rates and a decrease in consumer spending. Despite the increase in business bankruptcies, bankruptcy lawyer Derek Abbott notes that this doesn’t necessarily indicate broader economic trouble. Instead, he highlights certain sectors such as telecom, retail, and pharmaceutical that are facing challenges that contribute to the rise in bankruptcy cases. Commercial insolvencies saw a significant jump of 43% in the first three months of 2024 compared to the same quarter the previous year, and Hunter anticipates that filings will continue to rise throughout the year. The diverse nature of the US economy means that even in times of overall growth, some sectors will continue to struggle, leading to an increase in bankruptcy cases.

By Samantha Johnson

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