According to recent statistics, corporate bankruptcy applications in the United States increased last month, and first-quarter filings this year reached the highest level since 2010.
A total of 71 business bankruptcies were reported by S&P Global Market Intelligence in March, the highest monthly total since July 2020 and a rise of four consecutive months.
S&P Global said that 183 significant firms declared bankruptcy in the first three months of 2023, which is the most in that time period in the previous a decade.
The analysts looked at both public and private enterprises with public debt that reported assets or liabilities of at least $2 million at the time of filing, as well as private businesses that reported assets or liabilities of at least $10 million.
Consumer discretionary, with 23 files, financials, and health care, each with 14 bankruptcies, have been the industries most severely impacted so far this year, per the statistics.
The Kobeissi Letter creator Adam Kobeissi stated that it is “clear that the rise in bankruptcies is a product of weaker consumer spending due to inflation as well as rapidly rising interest rates.” Consumer staples and consumer discretionary firms, both of which are extremely susceptible to rising inflation, have seen over 20% of bankruptcy.
Eight firms filed in both the energy and information technology sectors, while another 13 filed in the industrials sector.
In March, a number of well-known companies filed for bankruptcy or sought protection to restructure, most notably Silicon Valley Bank, which did so one week after being shut down by authorities due to a run on the bank on March 10.
SVB is currently the biggest bankruptcies of 2023, followed by Diamond Sports Group, a regional sports division of Sinclair Broadcasting Group, Avaya Inc., Serta Simmons Bedding, and Party City, all of which had liabilities in the billions of millions.