Bankruptcy filings from US-based companies have broken a 14-year record, excluding the pandemic levels, by recording more than 500 bankruptcies year-to-date. So far, the year is only 6 companies away from attaining the bankruptcy levels witnessed in 2020 during the COVID-19 pandemic.
The U.S. bankruptcies filed from January through September hit the highest level in the last 14 years. A total of 512 large companies have filed for bankruptcy since the year started. The number falls short of 6 companies to march the bankruptcy levels recorded during the COVID-19 pandemic.
August and September break a 4-year record with 59 and 63 bankruptcies
According to market commentary firm Kobeissi Letter, August and September alone recorded 59 and 63 bankruptcies, breaking the 4-year record.
BREAKING: 512 large US companies have declared bankruptcy year-to-date, only 6 less than during the 2020 pandemic.
Outside of the pandemic, this is the largest number of bankruptcies in 14 years.
In September and August alone, 59 and 63 firms filed for bankruptcy, the most in… pic.twitter.com/htDXUtcXRk
— The Kobeissi Letter (@KobeissiLetter) October 15, 2024
Three notable September filings involved companies that owed more than $1 billion at the initial filing in the consumer discretionary sector. These companies included Big Lots Inc., Tupperware Brands Corp., and Wheel Pros LLC.
Fourteen companies with headquarters in California made up over 20% of all filings in April. New York registered 8, followed by six companies from Texas and Florida. Arizona recorded three bankruptcies. Other states had filings from less than two companies in April.
A survey by S&P Global Market Intelligence revealed that June had the highest number of bankruptcies, with 72 filings. April followed June with 68 insolvency cases. May followed with 60 filings, and March trailed close behind, with 58 companies going under.
The consumer discretionary sector leads with the most bankruptcy filings
The consumer discretionary sector witnessed the most bankruptcy filings, with 81 companies going under. Industrials trailed behind with 60 bankruptcies, and healthcare came in third with 48 companies. US consumer spending slowed in August as retail sales remained flat from July.
Out of 5 filings with more than $1 billion in liabilities, 3 came from the consumer discretionary sector as U.S. citizens retraced their spending habits amid recession fears. A chart shared by Kobeissi Letter on X reveals that the YTD bankruptcy levels increased by 8 companies compared to 2023.
The years 2021 and 2022 saw 321 and 264 bankruptcies YTD, respectively, through September. Historically, about 100 more companies filed for bankruptcy in the last quarter. The prediction could mean the numbers will surge above the 600 mark when the year comes to an end.
U.S. insolvency cases have risen fastest since the 2008 financial crisis. In Q2, year-over-year bankruptcy numbers surged by about 40% to 6,276 cases. The increase marked the highest level in 7 years. Chapter 11 bankruptcy filings hit 2,462, which is the highest figure in 13 years.
Notably, the bankruptcy rate may be higher than the one revealed by the S$P Global Market Intelligence bankruptcy survey. The survey only applies to massive publicly traded companies or private companies holding public debt and $2 million or more in liabilities or assets at the time of insolvency or privately operated companies with liabilities or assets equating to or more than $10 million.
According to Statistica data, the largest all-time bankruptcy in the U.S. remained Lehman Brothers Investment Bank. The company had $691 billion in assets during its insolvency in mid-September 2008.
