Corporate America is witnessing a new crisis: a wave of bankruptcies.

1. As per new data, it’s possible that 2023 could become the worst year for corporate bankruptcies in over ten years. A notable rise of 68% in U.S Chapter 11 bankruptcy filings was observed in the first half of the year as compared to last year.
2. High profile bankruptcies such as those of Bed Bath and Beyond, the trucking company Yellow Corp and SmileDirectClub.Inc, have raised concerns about the resilience of the U.S economy.
3. Economic troubles such as rising #interest rates, increasing borrowing costs and #inflation worries have severely impacted financially weakened companies, struggling with heavy #debt loads.
4. To cut down costs initially, companies began laying off workers. But despite changing their business strategies, they failed to recover and manage in these difficult times.
5. According to S&P Global Market Intelligence report, 62 companies have already filed for bankruptcy in September. This brings the total number of bankruptcies filed to 516 so far.
6. Bankruptcy figures for the past year are reported on a quarterly basis.
7. If this trend continues, soon we will surpass the figures for 2020, the phase of COVID-19 which witnessed the filings of 518 bankruptcies by the end of the third quarter.
8. As of this year, the total number of bankruptcies remains higher than those in 2021 and 2022, with one more quarter to go.
9. As per reports, new data suggests that nearly half of all publicly traded companies in the U.S are unprofitable. This raises concerns about them being at risk should interest rates continue to rise or remain elevated for a longer period.

After a series of continuous rate hikes to control inflation, chances are high that the #FED may hike rates once again as a tool to tame inflation.

How will this affect the corporate sector in the coming months? Will there be an increase in bankruptcies?

“Only time will tell”.