Corporate Bankruptcies Are Rising
If your business is struggling financially and is considering bankruptcy, your business certainly is not alone. According to a recent CNBC report, the recent rate of corporate bankruptcies has been “surging,” and there may be multiple causes. The upshot is that we are likely to see a higher rate of corporate bankruptcies in 2023 compared with recent years, and it is important for businesses to understand when bankruptcy may be beneficial. Our West Palm Beach bankruptcy lawyers can tell you more, and we can evaluate your business’s financial circumstances today in order to provide you with more information about a possible corporate bankruptcy and other options to manage business debt.
Bankruptcy Levels Reach Decade-Long High Amidst Climbing Interest Rates
According to the CNBC report, high corporate default rates have been going hand-in-hand with surging rates of corporate bankruptcy filings. Indeed, as bankruptcy rates rise, so do corporate default rates. And as the report underscores, the total number of corporate bankruptcy filings in the U.S. in 2023 has risen “to levels not seen since 2010.” Corporate default rates have doubled from this same time last year, based on current data. Overall, the data reflects how “U.S. companies are grappling with higher interest rates that make it more expensive to refinance debt as well as an uncertain economic outlook.” Interest rate increases are expected to continue this year, according to Federal Reserve Chairman Jerome Powell.
Many analysts say that the high interest rates are the root of corporate financial problems since “companies that are either in need of more liquidity or those that already have hefty debt loads in need of refinancing are faced with a high cost of new debt.”
Filing for Business Bankruptcy
What should you be doing now if your business is struggling and is considering bankruptcy? First, it is important to learn more about types of business bankruptcy and their effects. Filing for Chapter 7 bankruptcy is much different from filing for Chapter 11 bankruptcy.
With a Chapter 11 bankruptcy — a reorganization bankruptcy — your business can remain open and restructure debts over a period of time. With a Chapter 7 bankruptcy — a liquidation bankruptcy — your business will need to close its doors permanently, and business assets will need to be liquidated. In most instances, a Chapter 7 bankruptcy for a business is not recommended.
It will also be critical to discuss the details of your business with a bankruptcy attorney in West Palm Beach to determine eligibility for different types of bankruptcy and to move forward with a filing. Corporate bankruptcies are complex, and you will want to have an attorney on your side with experience handling business bankruptcy cases in South Florida.
Contact a West Palm Beach Bankruptcy Lawyer Today
Corporate bankruptcies can be particularly complicated, and it is essential to work on your case with one of the experienced West Palm Beach bankruptcy attorneys at Kelley Kaplan & Eller. Whether you have questions about a liquidation bankruptcy or a reorganization bankruptcy for your business, our firm can help. We regularly assist businesses in South Florida with Chapter 7 and Chapter 11 bankruptcies, and we can provide you with more information about your options.