www.arkansasonline.com Open in urlscan Pro
2606:4700:20::681a:baa  Public Scan

Submitted URL: http://go2.gri-solutions.net/click/adwp-2orrdq-ckpw9w-ifuj0vj0/
Effective URL: https://www.arkansasonline.com/news/2023/may/24/more-companies-file-bankruptcy-after-2-year-lull/
Submission Tags: falconsandbox
Submission: On February 05 via api from US — Scanned from CA

Form analysis 0 forms found in the DOM

Text Content

Skip to content Open sections menu Sections


 * NEWS
   
   * Today's Paper
   * Subscribe
   * Email Newsletters
   * Arkansas News
   * Election
   * Voter Guide
   * State Politics
   * Jan. 6 Timeline
   * LEARNS Guide
   * Education
   * Crime
   * Business
   * Immanuel Baptist scandal
   * Pine Bluff Commercial
   * Obituaries
   * Nation & World
   * Archives
   * Weather


 * SPORTS
   
   * All Sports
   * Razorbacks
   * Recruiting Columns
   * Wally Hall Columns
   * UALR
   * UCA
   * ASU
   * UAPB
   * Outdoors
   * High School
   * Betting
   * Horse Racing
   * NASCAR
   * LR Marathon


 * OPINION
   
   * All Columns
   * Columnists
   * Editorials
   * Rex Nelson
   * John Brummett
   * Brenda Looper
   * Philip Martin
   * Robert Steinbuch
   * Mike Masterson
   * Letters to the Editor


 * FEATURES
   
   * All Style
   * Plan it Janet
   * Cooking
   * High Profile
   * Food & Dining
   * Music
   * Movies
   * Televison
   * Events Calendar
   * Weddings
   * Arkansas Postcard Past


 * MEDIA
   
   * Photo Galleries
   * Videos
   * Arkansas 360
   * Daily Photos
   * Podcasts
   * Puzzles & Games


 * MARKETPLACE
   
   * Classifieds
   * Jobs
   * Autos
   * Real Estate
   * Legal Notices
   * Ads/Coupons
   * Legal Notices Archive


 * EXTRAS
   
   * Subscribe!
   * Advertise
   * Subscriber Help
   * ADG Staff List
   * FAQ
   * Contact Us
   * iPad Covers
   * Our Core Values
   * ADG Store


 * PROMOTIONS
   
   * Special Pubs
   * Best of the Best
   * Wedding Show
   * Pops on the River
   * Job Fair
   * Reader Rewards
   * All Arkansas Preps


Open user options menu
 * Manage Subscription
 * Sign Out
 * Sign In
 * Subscribe

 * Today's Paper
 * Home
 * Election
 * Voter Guide
 * News
 * Biz
 * Features
 * LEARNS
 * Sports
 * Opinion
 * Obits
 * | Archives
 * Newsletters
 * Games

 * 
 * 
 * 

Advertisement

Advertisement



MORE COMPANIES FILE BANKRUPTCY AFTER 2-YEAR LULL

Numbers still low, but fears of economic stress growing

May 24, 2023 at 4:56 a.m.

by Jeanne Whalen The Washington Post

 * 
 * 
 * 

Follow
Follow this topic
Close X
Submit

Corporate bankruptcies are edging back up after a two-year lull as pressures in
the economy grow, a situation sure to worsen if the nation's political leaders
fail to reach a deal to prevent the government from defaulting on its debt.

The increase is most visible among large companies, where there were 236
bankruptcy filings in the first four months of this year, more than double 2022
levels, according to S&P Global Market Intelligence.

Several large, recognizable companies with hundreds or thousands of workers have
filed for bankruptcy protection in recent weeks, including Bed Bath & Beyond and
Vice Media, although their financial troubles predated the recent economic
turmoil.

Among all types of companies, large and small, the increase in bankruptcies is
much more muted, with filings remaining below pre-pandemic levels and historic
norms, according to Mark Zandi, chief economist at Moody's Analytics. The total
numbers are still "very, very low," he said.

Yet filings are creeping up as interest rates rise, pandemic-era government
support dries up and sales growth slows amid a cooling economy.

ADVERTISEMENT


"The era of low interest rates and pandemic-related government support programs
helped keep companies afloat that may have otherwise had few other options," S&P
analysts said of their large-company data. "Now that interest rates are back to
pre-Great Recession levels and pandemic support programs are largely over, we're
seeing a fresh uptick in a possible sign that companies are running out of
time."

Any failure to reach a deal on the debt ceiling and avoid a government default
would clearly worsen the problem, Zandi said.

Even a short-lived failure to pay government debts would push the economy into
recession, he said. "That means businesses are going to be struggling with
weaker sales. They're probably not going to be able to get credit," he said. "So
very quickly, you will be running out of cash and having to make some pretty
hard choices -- layoffs, slashing investment and ultimately bankruptcy."

Any long-lasting default would be "catastrophic" and cause a "tsunami of
bankruptcies," he added.

There were about 16,200 bankruptcy filings among all types of companies in U.S.
District Courts in the first quarter -- up from 12,200 a year earlier, but still
well below the 21,000-or-more-a-quarter in the pre-pandemic period, data from
Moody's Analytics shows. Even those pre-pandemic numbers were relatively low in
historic terms, in part because low interest rates made it easy for companies to
borrow.

ADVERTISEMENT


Companies that sell nonessential consumer items have been harder hit than other
sectors as Americans curb their spending amid high inflation, S&P said.
Plant-Based Pizza Boston, catalogue retailer AmeriMark Interactive and the Party
City retail chain are among the recent casualties.

In April, the dress retailer David's Bridal filed for bankruptcy and said it was
seeking a buyer, days after informing state labor departments that it planned to
lay off more than 9,000 employees nationwide. The 70-year-old company said its
business was weighed down by "the post-covid environment and uncertain economic
conditions."

Long-troubled Bed Bath & Beyond, which filed for bankruptcy in late April, got a
boost from the wave of consumer spending during the pandemic -- when Americans
spent more time at home. But when the economic climate shifted and stubbornly
high inflation reduced discretionary purchases, the retailer's fortunes tumbled.

Recent filings make clear how some large, indebted companies were clobbered by
the end of easy money. A Vice Media bankruptcy filing last week disclosed that
the company had been cash flow negative for several years, forcing it to borrow
heavily to fund operations. As interest rates rose, it became costlier for Vice
to refinance those loans.

Known for its brand of "gonzo" journalism, the company, which employs more than
1,300 people globally, struck a deal to sell itself out of bankruptcy to
Fortress Investment Group, Soros Fund Management and Monroe Capital.

Similarly, U.S. mattress maker Serta Simmons got some $200 million in private
emergency financing at the height of the pandemic to help keep the troubled
company afloat, but more recently, rising interest rates combined with a
slowdown in consumer spending on goods weighed on the company, which filed for
bankruptcy protection in January.

Envision Healthcare, a heavily indebted provider of staffing to hospitals, also
struggled with higher interest rates before filing for bankruptcy last week. The
company, owned by private-equity investors, said it faced "a whiplash-inducing
onslaught of obstacles and complications," including a labor shortage that
pushed up wages and inflation in equipment costs.

Turmoil in the banking business in March also contributed to a small rise in
bankruptcy filings in that sector this year, S&P said. The most notable filing
was SVB Financial Group, the parent company of Silicon Valley Bank, which
collapsed after a run on the bank's deposits.



Topics
S&P, Silicon Valley Bank, Moody’s, U.S. district, U.S., labor department

Advertisement

Recommended For You
 * Immanuel Baptist pastor: Devil is attacking church, its families
 * Man pleads guilty in fatal I-30 crash
 * UAPB men’s basketball team outlasted Mississippi Valley State
 * Arkies in the Beltway | Week of Feb. 4, 2024
 * HIGH PROFILE: Olivia Wyatt is making plans to enter the Golden Globe Race

Advertisement



Sponsored Content
Recommended by





 * NEWS
   
   * Today's Paper
   * Subscribe
   * Email Newsletters
   * Arkansas News
   * Election
   * Voter Guide
   * State Politics
   * Jan. 6 Timeline
   * LEARNS Guide
   * Education
   * Crime
   * Business
   * Immanuel Baptist scandal
   * Pine Bluff Commercial
   * Obituaries
   * Nation & World
   * Archives
   * Weather


 * SPORTS
   
   * All Sports
   * Razorbacks
   * Recruiting Columns
   * Wally Hall Columns
   * UALR
   * UCA
   * ASU
   * UAPB
   * Outdoors
   * High School
   * Betting
   * Horse Racing
   * NASCAR
   * LR Marathon


 * OPINION
   
   * All Columns
   * Columnists
   * Editorials
   * Rex Nelson
   * John Brummett
   * Brenda Looper
   * Philip Martin
   * Robert Steinbuch
   * Mike Masterson
   * Letters to the Editor


 * FEATURES
   
   * All Style
   * Plan it Janet
   * Cooking
   * High Profile
   * Food & Dining
   * Music
   * Movies
   * Televison
   * Events Calendar
   * Weddings
   * Arkansas Postcard Past


 * MEDIA
   
   * Photo Galleries
   * Videos
   * Arkansas 360
   * Daily Photos
   * Podcasts
   * Puzzles & Games


 * MARKETPLACE
   
   * Classifieds
   * Jobs
   * Autos
   * Real Estate
   * Legal Notices
   * Ads/Coupons
   * Legal Notices Archive


 * EXTRAS
   
   * Subscribe!
   * Advertise
   * Subscriber Help
   * ADG Staff List
   * FAQ
   * Contact Us
   * iPad Covers
   * Our Core Values
   * ADG Store


 * PROMOTIONS
   
   * Special Pubs
   * Best of the Best
   * Wedding Show
   * Pops on the River
   * Job Fair
   * Reader Rewards
   * All Arkansas Preps

 * Contact Us
 * Advertise With Us
 * Terms of Use

Copyright © 2024, Arkansas Democrat-Gazette, Inc.

All rights reserved.

This document may not be reprinted without the express written permission of
Arkansas Democrat-Gazette, Inc.

Material from the Associated Press is Copyright © 2024, Associated Press and may
not be published, broadcast, rewritten, or redistributed. Associated Press text,
photo, graphic, audio and/or video material shall not be published, broadcast,
rewritten for broadcast or publication or redistributed directly or indirectly
in any medium. Neither these AP materials nor any portion thereof may be stored
in a computer except for personal and noncommercial use. The AP will not be held
liable for any delays, inaccuracies, errors or omissions therefrom or in the
transmission or delivery of all or any part thereof or for any damages arising
from any of the foregoing. All rights reserved.