Thanks Coronavirus! Bankruptcies Are Hitting a Record
I would be surprised if anybody thought the business environment was good this year, but wow, things may be even worse than we thought. Now we are learning that bankruptcies are happening at their highest rate since 2013.
Between January 1st and June 24th of 2020, 3,427 companies in the United States filed for Chapter 11 protection. You may remember when the rental company Hertz declared bankruptcy in May. Since then, they have been joined by Chesapeake Energy, Instelsat, J.C. Penney, and even Cirque du Soleil, to name a few.
In the first half of 2008, 3,491 companies went belly up. By the end of 2009, that number jumped above 20,000. Twelve years later, we are headed back in that direction. Covid has shocked both the supply and the demand side of the economy, roiling supply chains and forcing millions out of work. The number of companies defaulting on debt in the first half of 2020 is higher than total defaults for all of 2020. Globally, 119 companies have defaulted on debt this year, including 78 in the United States.
Trucking has not been immune to this. After a ‘bloodbath’ of a year in 2019, the industry is seeing some major bankruptcies again. In May, Comcar announced that it would sell off five business units, employing 949 truckers. A few short weeks later, the Treasury Department bailed out LTL carrier YRC.
The economy is picking up by several measures – unemployment, consumer spending, and manufacturing are a few. It still isn’t enough, however, to rescue companies from going under this year.
