BIDENOMICS: August Bankruptcies Spike, 2023 Highest on Record

These bankruptcies will feed into unemployment as the employment picture starts to shift. And the debt hit 33 trillion.

Zombie corporations employ 2.2 million people – when zombies fail all at once, it will exacerbate a crisis and pose financial stability concerns.

August Commercial Chapter 11 Filings Increase 54 Percent Over Last Year

NEW YORK – Sept. 5, 2023 — There were 634 commercial chapter 11 filings registered in August 2023, an increase of 54 percent from the 411 filings registered in August 2022, according to data provided by Epiq Bankruptcy, the leading provider of U.S. bankruptcy filing data.

Overall commercial filings increased 14 percent to 2,328 in August 2023, up from the 2,045 commercial filings registered in August 2022. Small business filings, captured as subchapter V elections within chapter 11, increased 43 percent to 194 in August 2023, up from 136 in August 2022.

Total bankruptcy filings were 41,614 in August 2023, an 18 percent increase from the August 2022 total of 35,409. Individual bankruptcy filings totaled 39,286 in August 2023, also registering an 18 percent increase from the August 2022 33,364 filing total. There were 22,887 individual chapter 7 filings in August, a 21 percent increase versus the 18,851 filings in August 2022, and there were 16,341 individual chapter 13 filings in August, a 13 percent increase over the 14,457 filings the previous year.

August marks 13 consecutive months that total, individual and commercial bankruptcy filings have registered monthly year-over-year increases.

Economist Stephanie Pomboy has sounded a cautionary note, suggesting that the surge in US corporate bankruptcies represents a more significant economic risk than many market participants have recognized. She goes so far as to propose that this trend could foreshadow an event that surpasses the scale of the 2008-2009 financial crisis.

In a recent post on X, the founder and president of the boutique research firm Macro Mavens argued that while some economic commentators have been discussing the collapse of American companies, they have yet to grasp the full extent of the problem. The data supports Pomboy’s concerns, as S&P Global Market Intelligence reports that more US companies went bankrupt in the first half of the year than during any other six-month period since 2010. The primary culprit has been historically high interest rates, placing immense pressure on American businesses. Shockingly, this wave of bankruptcies even exceeded the levels seen in the same period of 2020, when the pandemic wreaked havoc on the economy.

Pomboy emphasized the gravity of the situation by pointing out that even though some have begun to echo her concerns about corporate bankruptcies, they have not fully connected the dots. She suggests that if they did, they would be advocating for a fiscal and monetary response that far surpasses the measures taken during the 2008-2009 financial crisis.

Well-known names such as Silicon Valley Bank, Bed Bath & Beyond, Lordstown Motors, and Mediamath Holdings have succumbed to bankruptcy in recent months, underscoring the breadth of this economic challenge. Pomboy has been consistently raising alarms about looming economic and market risks in 2023.

Economist Stephanie Pomboy has sounded a cautionary note, suggesting that the surge in US corporate bankruptcies represents a more significant economic risk than many market participants have recognized.https://t.co/TBMmDuivxg pic.twitter.com/Yh5LyYnAbW

— NewsPolly (@NewsPolly) September 21, 2023

S&P Global Market Intelligence recorded 459 bankruptcy filings in 2023 as of Aug. 31, more than the full-year totals for 2021 and 2022. The year-to-date figure is also higher than the comparable total for all but two of the prior 13 years. Fifty-seven companies sought bankruptcy protection in August.

August adds 57 more US corporate bankruptcies; 2023 total tops prior 2 years

By: SP Global, September 22, 2023:

US corporate bankruptcies filed year-to-date have exceeded annual totals for both 2021 and 2022 as companies continue to face high interest rates and a tight labor market.

S&P Global Market Intelligence recorded 459 bankruptcy filings in 2023 as of Aug. 31, more than the full-year totals for 2021 and 2022. The year-to-date figure is also higher than the comparable total for all but two of the prior 13 years.

Fifty-seven companies sought bankruptcy protection in August. While the total was lower than July’s 64 filings, it was still markedly above most months in the prior two calendar years.

Proterra Inc. filed for bankruptcy on Aug. 7 and said in a statement that the filing would allow the company to maximize its value by separating each product line. The company, which manufactures commercial electric vehicles and EV technology solutions, said it had faced “market and macroeconomic headwinds” that had impacted its ability to efficiently scale all product lines.

Another notable bankruptcy filing came from Yellow Corp. on Aug. 6. The trucking company, which employed 30,000 freight professionals, cited a prolonged conflict with the International Brotherhood of Teamsters labor union over a business modernization plan as the primary reason for the company’s bankruptcy filing.

In its statement, Yellow also disclosed a pending lawsuit against the union, filed June 26. Yellow cited breach of contract and loss of enterprise value amounting to more than $137 million in damages. The union responded on June 27, denying the allegations and saying it would use “all available legal resources to challenge the meritless accusations put forth by Yellow Corp.”

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