Corporate Bankruptcies Hit a Post-2020 Record

June saw the highest monthly number of corporate bankruptcies since 2020, according to a report from S&P Global Market Intelligence. Also, the first half of 2024 saw total bankruptcies surpassing first-half-year figures across more than the previous decade.

It took Covid-19 to push as many corporations into situations that required bankruptcy in 2020. Now the driving forces are high interest rates, slowing consumer spending, and ongoing supply chain issues that many have thought were solved.

The total for June was 75. In 2020, the only number close was the 74 in the same month. Other than March 2021, during that year and 2022, the typical monthly number of bankruptcies was about this June’s total.

For the first half years, the number was 346 in 2024. The last time a first half year saw more bankruptcies was the 467 in 2010 H1.

S&P had noted earlier this year that 2023 hit a 13-year peak of corporate bankruptcies, the highest since the Great Financial Crisis. There were 642 total filings, “marginally more than in 2020, which saw a flurry of COVID-19 pandemic-related filings.”

If the pace of 2024 continues, this year could face more bankruptcies than last year, setting a new post-GFC record.

Some of the bankruptcies filed in June included Chicken Soup for the Soul Entertainment (a subsidiary of the bigger publishing company) and Eastern Mountain Sports.

Fisker Group, which made electric vehicles, was also on the list. “The company announced a pause in production of its flagship Ocean SUV in March as it sought funding and a potential transaction with a larger automaker,” S&P Global wrote. The company pointed to interest rates, supplier delays, and insufficient skilled labor to build their vehicles.

So far in 2024, 17 billion-dollar bankruptcies have been filed. They included Red Lobster Management, Steward Health Care System, JOANN Inc., Consultant Health Care, and Zachry Holdings.

The biggest sectors in terms of 2024 bankruptcy filings were consumer discretionary (55), healthcare (40), industrials (40), information technology (20), consumer staples (19), financials (16), materials (11), communication services (10), energy (4), and utilities (3).

Many of these filings could affect commercial real estate owners. Just as WeWork used bankruptcy laws to reject leases, so could any and all of these companies. That might be felt most broadly in consumer-oriented filings like those of Red Lobster and JOANN. The more locations, the more property owners could find themselves potentially losing rent owed.