Corporate bankruptcies continued to mount in June, as companies face higher costs and interest rates in an unstable economic environment.
There were 54 corporate bankruptcy filings in June, according to a report from S&P Global Market Intelligence. This follows the same number of filings in May but represents a total that is significantly higher than most months in 2021 and 2022. Thus far, corporate bankruptcy filings in the first half 2023 have tallied higher than the same period in any year since 2010.
While these filings span a range of industries, the majority were concentrated within the consumer discretionary sector, which accounted for 45 filings in the first half of the year. Across all industries 15 companies with a total of $1 billion in liabilities filed for bankruptcy. Two of these filings came from major players in the retail sector: Bed Bath & Beyond and Party City.
Overall, experts had predicted that bankruptcies in the sector would come back in a large way in 2023 after a slower year in 2022, due to a slowing economy, higher interest rates and a more cautious consumer.
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Six major retailers had already filed for bankruptcy between the start of 2023 through the end of February, according to BDO’s bi-annual bankruptcy report released in late March. This early spurt represented more than the total number of retail bankruptcies in 2022, a year in which retail sales were relatively stable until the last quarter.
But while the economy is currently challenged, there are also some signs of recovery.
According to the National Retail Federation’s Monthly Economic Review that went live on Thursday, first-quarter metrics such as gross domestic product adjusted for inflation, the personal savings rate and private final sales to domestic purchasers were actually stronger than initially reported. Consumer spending also showed growth in Q1 despite inflation.
“The first half of the year is over and the economy is still moving in the right direction,” NRF’s chief economist Jack Kleinhenz said in a statement. “While its rhythm, tone and pattern have slowed, it has not stalled and recently revised data shows underlying strength that seems to be rolling forward.”
