The Rising Tide of Business Bankruptcies: How Increasing Interest Rates and Inflation Are Straining Companies

In recent months, several large companies have filed for Chapter 11 bankruptcy, sparking a debate among legal and business experts about the factors contributing to this trend. Among them is the restaurant chain Red Lobster, which is reportedly considering restructuring through Chapter 11 bankruptcy. This news emerged last week, adding to the list of companies facing financial challenges in the current economic climate.

Retailer Express and Tex-Mex chain Tijuana Flats are also among those that have recently announced their Chapter 11 filings. These bankruptcy filings highlight the economic pressures that many businesses are currently facing as a result of various factors.

Adam Marshall, an attorney with Lorium Law, noted that increasing interest rates have added to the financial strain on businesses. While interest rates overall remain historically low, the recent uptick has made borrowing money more expensive for many companies. This has created challenges for businesses trying to manage their debt service obligations, especially in light of the lingering impact of the pandemic.

Business analyst Carl Gould echoed these sentiments, noting that the volatility of inflation and interest rates is likely to continue affecting businesses. As operating costs rise and borrowing money becomes more expensive, many companies are finding it difficult to stay afloat. This ripple effect of economic factors is contributing to the spike in bankruptcy filings among companies of various sizes across different industries.

In conclusion, while there are various factors contributing to this trend, it seems clear that rising interest rates and volatility in inflation and interest rates are playing a significant role in driving businesses towards bankruptcy filings. It remains to be seen how these trends will continue to shape the future of business in these challenging times.