The first month of 2016 brought both good news and bad news regarding bankruptcy filings. While U.S. bankruptcy filings decreased by 11%, dropping to 52,522, there was a rise in corporate bankruptcy. Compared to the previous year, January 2016 saw a 13% increase in businesses filing for bankruptcy. This is a shocking turn of events, coming off a 20% drop in Chapter 11 business bankruptcy filings in 2015.
Why the rise?
Most lawyers and advisers are citing the oil and gas industry as the primary contributor to the amount of companies filing. Oil prices have dropped substantially over the past year and a half. Consumers love paying less at the pump, but most ignore the many ramifications of the huge reduction in price. From affecting the global economy to creating uncertainty in the Middle East, a debilitated oil industry is cause for great concern.
The Bottom Line
The fact is, when the oil industry suffers, we all do. The increasing number of oil companies filing for bankruptcy is bound to have some serious repercussions for Americans. For starters, retirement funds are at stake. The energy sector’s current situation is a major reason why the Dow has dropped 1,500 points already this year. It also threatens the investment portfolios of many with the menace of energy bonds on the verge of defaulting. According to the U.S. Bureau of Statistics, there have been 91,000 energy-related job cuts since December 2014. Lastly, there are many states and regions whose economies depend on the industry. Therefore, its troubles are their troubles, as they have already led to a rise in personal bankruptcies and foreclosures.
Of course, the oil and gas industry woes have also negatively impacted other industries and local businesses. If you or your business are seeking to file bankruptcy, it’s always important to enlist the help of an experienced bankruptcy attorney to learn your options. Set up a consultation with one of the top-rated West Palm Beach bankruptcy attorneys at Kelley & Fulton before making any decisions.