Will High Corporate Bankruptcy Rates Continue in 2024?
Business bankruptcies increased throughout 2023, and commentators regularly remarked on the rising rates of corporate bankruptcy filings under both Chapter 7 and Chapter 11. According to a recent report from NPR, consumers have been surprised to learn about recent business bankruptcies given that the economy has shown signs of improvement. Many of the 2023 corporate bankruptcies were filed by very large retailers, such as Bed Bath & Beyond, Rite Aid, and WeWork. As the article reports, those were just a few of the hundreds of corporate bankruptcy filings that occurred in 2023. While many of those filings were not Chapter 7 liquidation cases and instead were reorganization bankruptcies — which means those companies filing for reorganization bankruptcy are still operational — a number of them are still struggling. Indeed, NPR reports, many “are limping along.”
Could 2024 see a continuing rise in corporate bankruptcy filings? And what does the trend mean for businesses in South Florida that are currently struggling financially and considering bankruptcy? Our South Florida business bankruptcy lawyers can say more.
Many Companies Were Able to Delay Bankruptcies
What is causing the continuing rise in corporate bankruptcy filings? As NPR explains, given that 2023 say “inflation finally cooling off anc consumer confidence improving,” signs suggested that business bankruptcies would decline, or at least plateau. Yet the opposite occurred. One of the reasons, the report suggests, is that federal aid and loans during the COVID-19 pandemic allowed many struggling businesses to delay bankruptcy filings. As payments on federal business loans have become due and COVID-19 aid is no longer available, many businesses had to acknowledge difficult financial circumstances and file for bankruptcy.
“Skyrocketing” Rate of Zombie Companies Could Result in More Filings in 2024
In addition to the ability to delay bankruptcy in some cases as discussed above, there is also a “skyrocketing” rate of “corporate zombies.” These are businesses that are not even earning enough to pay the interest on business loans but have somehow remained open.
In total, more than 500 businesses filed for bankruptcy in 2023 — a mix of liquidation and reorganization bankruptcies. As the number of “corporate zombies” rises, commentators suggest that corporate bankruptcy rates may also increase. Although some of these “corporate zombies” are currently still operational, the NPR report underscores that “many will eventually go bankrupt,” and the question is whether it will happen this year or in the future.
Types of Business Bankruptcy and How Our Firm Can Help
If your business is struggling, you may have options. For many companies, SBA loans, including EIDL loan funds, are now due. Yet businesses in South Florida should know that our firm can help with applications to temporarily reduce those payments for some businesses. Reducing the amount that needs to be repaid could allow your business to avoid bankruptcy, and our firm is here to assist you.
For businesses where bankruptcy seems like the most likely option, we can speak with you about filing for Chapter 7, Chapter 11, or Subchapter V bankruptcy today.
Contact Our West Palm Beach Bankruptcy Lawyers Today
Businesses can be eligible for different forms of bankruptcy, and it is critical for businesses in South Florida to know that reorganization bankruptcies do not require a closure of the business. To be sure, many businesses thrive for years and even decades following a reorganization bankruptcy. To find out more about Chapter 7, Chapter 11, and Subchapter V bankruptcy for your business, you should get in touch with an experienced West Palm Beach bankruptcy attorney at Kelley Kaplan & Eller, PLLC. Contact us today to discuss your options.
Source:
npr.org/2023/12/28/1221401948/bankruptcies-corporate-rise-inflation-2023-interest-rates
