According to data from S&P Global Market Intelligence, April 2024 witnessed a staggering 66 U.S. companies filing for bankruptcy protection, marking the highest monthly total in a year and a significant uptick from the revised 61 filings in March.
While year-to-date bankruptcy figures still trail behind 2023 levels, the accelerating pace of filings since the start of the year paints a worrisome picture.
As an S&P Global Market Intelligence report suggests, “Fading hopes of lower interest rates are likely contributing to the increase in filings, as companies that may have held out hope for rate cuts at the beginning of the year come to terms with the reality that they will remain higher for longer.”
The consumer discretionary sector, which includes retailers and other businesses reliant on consumer spending, has been hit particularly hard.
With eight bankruptcies in April alone and a total of 28 filings year-to-date, this sector leads the pack in terms of corporate distress.
The recent Chapter 11 filing of apparel retailer Express, which has resulted in the closure of 106 stores, is one example of the challenges faced traditional brick and mortar retailers in an era of rising labor and merchandise costs.
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Express is just one of three companies with liabilities exceeding $1 billion that sought bankruptcy protection in April.
The specter of Bidenomics looms large over these troubling developments.
As businesses struggle to deal with higher labor and input costs, which are a direct consequence of the administration’s economic policies, the viability of many companies hangs in the balance.
The surge in bankruptcies across various sectors underscores the far-reaching impact of these policies.
Among the notable companies that filed for bankruptcy in April 2024 are:
– Tijuana Flats, a U.S. restaurant company that filed for Chapter 11 bankruptcy in Florida
– Express Inc., a U.S. retail company that filed for Chapter 11 bankruptcy and store closure in Delaware
– Gardner’s Market, a U.S. food and beverage company that filed for Chapter 11 bankruptcy in Miami
– 99 Cents Only, a U.S. retail company that filed for Chapter 11 bankruptcy in Delaware
– ConvergeOne, a U.S. technology company that filed for Chapter 11 bankruptcy in Texas
– Number Holdings Inc., the parent company of discount retailer 99 Cents Only Stores LLC
As we look ahead, the outlook for corporate America remains uncertain.
With the persistent influence of Bidenomics it is our opinion that the number of corporate bankruptcies will continue to rise throughout the year.
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The healthcare and industrials sectors, which along with consumer discretionary accounted for the most bankruptcy filings in 2023, may also find themselves increasingly vulnerable.
