You are here: Home » International » News » Economy
Business Standard

US firms filing for bankruptcy at fastest pace since 2013: Report

During the last financial crisis, there were 8,614 company bankruptcies in the US in 2008, and the number rose to 12,644 in 2009, according to the report

Topics
Coronavirus | United States | Bankruptcy

IANS  |  Washington 

bankruptcy

US companies were filing for at the fastest pace since 2013 as the fallout from the COVID-19 pandemic continues to ripple through the country, a media report said.

Citing data from legal services group Epiq, The Financial Times report said on Tuesday that a total of 3,427 companies have filed for Chapter 11 in the US this year, close to the 3,491 filings during the first half of 2008, reported China's Xinhua news agency.

"The data stand in contrast to an improving economic backdrop following hefty central bank support across the globe and economies starting to reopen," the report said, noting the pain already inflicted by the global pandemic is too much for some companies to recover from.

"It is very difficult for these companies to operate in a near zero-revenue environment," Sudeep Kesh, head of credit market research at S&P Global Ratings, was quoted as saying in the report.

"They are facing a lot of pressure."

During the last financial crisis, there were 8,614 company bankruptcies in the US in 2008, and the number rose to 12,644 in 2009, according to the report.

The report came as the Paycheck Protection Program (PPP), a US government aid program intended to help small businesses retain their employees during the COVID-19 crisis, was set to close on Tuesday with more than $130 billion left unused.

Treasury Secretary Steven Mnuchin said on Tuesday that President Donald Trump's administration supports legislation to repurpose the remaining funds in the PPP.

"I've already had conversations with the SBA (Small Business Administration) committee in the Senate about repurpose that 135 billion dollars, and think that should be done, and look forward to working with both the House and the Senate so that we can pass legislation by the end of July," Mnuchin said at a hearing before the House Financial Services Committee.

The aim should be "extending it to businesses that are most hard hit, that had a requirement that their revenues have dropped significantly, things like restaurants and hotels and others where it is critical to get people back to work", he added.

The PPP was conceived as a lifeline to small businesses shuttered by the pandemic, but it also faced criticism as some big publicly traded companies secured millions of dollars of loans.

Amid mounting pressure from lawmakers and the public, the Treasury Department and the SBA said earlier this month that they would disclose information about businesses that take PPP loans of $150,000 or more.

 

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, July 01 2020. 11:13 IST
RECOMMENDED FOR YOU
.