Aaron L. Hammer, Chair of HMB’s Bankruptcy, Reorganization and Creditors’ Rights practice, expects U.S. corporate bankruptcies to remain low until late 2022 or 2023.
According to S&P Global Market Intelligence data, filings rose sequentially in December, with 40 companies entering bankruptcy proceedings in comparison to 18 in November. But the uptick is not an indication that corporate bankruptcy filings will increase in the immediate future, said Aaron.
“Companies are being kept afloat by both federal stimulus money and private credit, where lenders are still cutting businesses slack during the uncertainty of the pandemic.”
Aaron continued, “I don’t see corporate bankruptcy cases rising until the Federal Reserve substantially increases interest rates, or with global financial institutions having the stomach to finally start calling defaults on their borrowers.”