More than 7,100 U.S. businesses sought Chapter 11 bankruptcy protection last year as the world’s economic crisis crippled manufacturing, shut down exports, and kept consumers at home according to Epiq Systems, a legal services provider.
The number was about 29 percent above 2019’s, the company noted.
As federal subsidies shrink or end, the pace of business bankruptcies could continue or even increase, Judah Gross, director of Fitch Ratings, told the Wall Street Journal.
As business failures soared in 2020, the number of bankruptcies among individuals plunged, even as millions lost their jobs and drained their savings. Federal unemployment payments, rent suspensions, mortgage forgiveness programs, and other supports kept households afloat that otherwise would have sunk into insolvency, analysts said.
TREND FORECAST: The worst is yet to come. Yes, there will be a bounce-back as more cheap money is injected into the equity markets and the general economy. However, consumer bankruptcies are a trailing indicator of national economic distress and are likely to rise significantly during the last half of this year, as Chris Kruse, Epiq’s senior vice president, said to the Journal.
