SVB, BBBY, Lordstown lead list of US bankruptcies as companies fold up at the fastest pace since 2010
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- First-half US corporate bankruptcies surged to the highest level since 2010, data from S&P Global Market Intelligence shows.
- Almost 3,000 firms folded up in the last six months, a 68% jump from a year earlier, according to Epiq Bankruptcy.
- American businesses have come under increased stress after the Federal Reserve raised interest rates aggressively.
More US companies collapsed during the six months through June than any other half-year period since 2010 as historically high interest rates heaped pressure on American businesses.
Corporate bankruptcies in the first half of this year outstripped even the same period of 2020 – when the coronavirus pandemic wreaked havoc on the economy, according to data published by S&P Global Market Intelligence. Silicon Valley Bank, Bed Bath & Beyond, Lordstown Motors and Mediamath Holdings were some of the well-known names that went under during the last six months.
Total company failures for the period surged 68% from a year earlier to almost 3,000, according to data provider Epiq Bankruptcy.
American companies have come under increased stress from elevated debt costs and bond losses after the Federal Reserve boosted interest rates by a staggering 500 basis points since last spring to tame multi-decade high inflation.
Experts including economist David Rosenberg and Morgan Stanley strategist Mike Wilson have predicted the economy to tip into a recession in the coming quarters.
"This trend points to the economic trials businesses are facing right now, which are impacted by rising interest rates, inflation, and increased borrowing costs, to name a few," said Gregg Morin, Vice President of Business Development and Revenue at Epiq Bankruptcy, the firm that published the report.
S&P Global's research shows that even some of the larger companies are struggling to cope under the pressure – 15 companies, each with over $1 billion in debts, filed for bankruptcy in the first half.
Rising corporate bankruptcies are a worrying sign for the wider US economy, which is already under strain from the effects of the Fed's aggressive interest rate hikes.