More than 500 of America’s large companies filed for bankruptcy, the highest level in a decade.
On October 12th global market intelligence said 504 larger U.S. companies had filed for bankruptcy this year as a result of the new coronavirus outbreak. The number of bankruptcy filings in any comparable period since 2010 is at a 10-year high.
Among them, consumer, industrial, and energy companies account for the majority. In addition, as of the end of August, 46 of the companies with assets of more than US$1 billion declared bankruptcy this year.
Prior to this, Neiman Marcus and Century 21, a luxury department store in the United States, filed for bankruptcy protection in May and September this year. In July, Ascena, the parent company of Ann Taylor and Lane Bryant, the largest US womenswear brand, also declared bankruptcy. On October 6, the veteran American restaurant Ruby Tuesday, which was born in 1972, filed for bankruptcy, becoming the latest company to fall under the impact of the epidemic.
Edward Altman, an emeritus professor at the Stern School of Business at New York University, said that if such a high rate of bankruptcy continues to be maintained. By the end of this year, the number of US$1 billion-plus enterprises that have gone bankrupt may reach 65. The previous high of 49 during the economic crisis in 2009 will break this record this year.
According to Bloomberg statistics, in the first nine months of this year, a total of 193 companies with debts of more than $50 million applied for approval. If the number of applications continues to accelerate into the autumn and winter, then this year may catch up with the high point of 271 set in 2009.
The situation for small and medium-sized enterprises is even worse.
More than 100,000 small businesses in the U.S. have been permanently shut down because of financial hardship since the outbreak began, the Washington Post reported.
At the end of March, Congress approved a $2.2 trillion stimulus package. Trump said the bill would provide much-needed relief to small and medium-sized businesses and individuals. The bill would also allocate $350 billion to lend to small businesses.
But according to U.S. media reports, more than $1 billion of the small business aid program has gone to companies that have already received multiple loans. Nearly $200 million went to government contractors that had previously been labeled “with significant performance and integrity issues.”
In addition, several members of Congress and senior government officials were found to have benefited from companies that received loans. Trump’s own law firm is also one of the companies that have been assisted.