Business bankruptcies highest in 13 years

Corporate bankruptcies in the United States this spring, based on the latest reports, with the first five months of 2023 seeing the highest number of filings since 2010.

Filings from Serta Bedding to Party City to Bed, Bath and Beyond, have many concerned.

There were 54 corporate bankruptcy filings in May, up from 52 in April, according to a June 6 report published by S&P Global. In the first five months of 2023, there have been 286 corporate bankruptcy filings, more than double the 138 filings seen during the first five months of 2022. This is also the highest number of filings for a January to May period since 2010, when 402 filings were recorded.

Bankruptcies continued into June and July, most notably, Bed, Bath and Beyond.

Consumer discretionary companies accounted for the most number of bankruptcy filings so far this year, with 37 filings in the sector. This was followed by industrials with 31 bankruptcy filings, healthcare with 25, financials with 22, and energy with 11 filings.

Consumer staples and information technology saw 10 corporate filings each. Communication services had six filings, while utilities, materials, and real estate sectors registered three each.

The largest bankruptcies in 2023 so far were Envision Healthcare, Kidde-Fenwal, Monitronics International, Whittaker Clark & Daniels, Bed Bath & Beyond, LTL Management, SVB Financial Group, Diamond Sports Group, Avaya, Serta Simmons Bedding, and Party City Holdco, with each of these bankruptcies carrying over $1 billion in liabilities.

According to a June 2 press release by the American Bankruptcy Institute (ABI), commercial Chapter 11 bankruptcy filings rose by 105 percent in May 2023 from a year back.

Chapter 11 filings for May 2023 came in at 680, up from 332 filings in May 2022, ABI said, citing data from partner Epiq Bankruptcy, the leading provider of U.S. bankruptcy filing data. Almost half of these filings were made by corporate subsidiaries.

Small business filings rose by 31 percent during this period. Meanwhile, overall commercial filings also jumped 31 percent to 2,324.

“Rising interest rates, inflation, and elevated costs of borrowing can represent a daunting economic challenge to struggling families and businesses,” said ABI Executive Director Amy Quackenboss. “Amid these sustained economic pressures, bankruptcy provides financially distressed companies and households with access to a release valve.”

Back in April, Bob Nardelli, the former CEO of Home Depot, had warned about more bankruptcies hitting America’s businesses.

“I think we’re going to see a lot of bankruptcies, like Bed, Bath, and Beyond. We got Walmart not only laying people off but closing stores. We got Accenture laying people off. We got Amazon closing distribution centers. So, I think there’s a tremendous-mixed message,” he said in an interview with Fox.

The former Home Depot CEO said he was seeing “inventory builds” in a lot of public and private businesses. He pointed to the 2007–09 period when the banking meltdown took “everything down.”

–Wire services