Corporate bankruptcies among U.S. companies increased in the first quarter to their highest level since 2010, new data showed.
S&P Global Market Intelligence reported that from January through the end of March, there were 188 bankruptcies filed among large U.S. companies, an increase from 139 bankruptcy filings in the first quarter of 2024, which was a 14-year high at the time.
The 188 bankruptcies in the last three months are the most in the first quarter since 2010, when there were 254 bankruptcy filings as the economy reeled in the wake of the financial crisis.
“Companies, particularly those with weaker balance sheets, continue to face challenges as debt matures and needs to be refinanced at higher interest rates than at the time of issuance,” S&P Global wrote.
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The report noted that for non-investment-grade companies, financial metrics based on Market Intelligence data showed that those firms are dealing with rising debt pressure and also that companies are slightly less able to pay interest with cash on hand.
The largest number of bankruptcies in the first quarter of this year occurred in the industrials sector with 32, followed by consumer discretionary with 24. Those sectors combined to account for nearly 30% of bankruptcies in Q1.
S&P Global noted that the industrials and consumer discretionary segments of the S&P 500 were down 0.53% and 13.97%, respectively, in the first quarter.
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Notable companies that filed for bankruptcy in the first quarter with more than $1 billion in liabilities were F21 OpCo LLC, owner of the Forever 21 apparel chain, along with electric vehicle-maker Nikola and crafts retailer Joann.
Other notable firms that entered the bankruptcy process include restaurant chain Hooters and genetic testing company 23andMe.
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Despite the uptick in corporate bankruptcies in the first quarter relative to last year, they remained well below the levels of bankruptcies seen during the financial crisis — which peaked at 1,836 in 2009.
Since 2020, the highest monthly total of bankruptcy filings was in July 2020, when there were 74 bankruptcies.
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