Bankruptcies Show A Surprising Decline
When the Covid-19 recession hit it seemed certain that a wave of bankruptcy filings would follow, swamping the court system and possibly even leading to a systemic collapse. Oddly, though, there hasn’t been any wave. By one key measure, bankruptcy filings have actually declined from last year.
While Chapter 11 filings overall are up 21% from last year, that number has been swelled by a sharp increase in filings by companies that have multiple affiliates, each of which files separately, says Ed Flynn, a consultant to the American Bankruptcy Institute. Counting just parent companies and those with no affiliates, Chapter 11 filings are 28% lower for March 1 through Sept. 30 compared with the same period a year earlier, according to Flynn’s calculations. “It’s kind of amazing,” he says.
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Bloomberg Businessweek by Peter Coy. Published October 9, 2020.