Epiq Systems, Inc., a provider of managed technology for law firms, advises that total business bankruptcy filings in the United States have increased by 5% on a year-on-year basis, to a total of 65,511.
However, while consumer bankruptcy filings were up 5%, business Chapter 11 filings were up 30% on the same basis, from 298 Chapter 11 filings in November 2014 to 390 filings in November, 2015.
Nevertheless, the Wall Street Journal has just reported that the United States economy expanded at a modest pace in November 2015, with a rise in consumer spending and the beginnings of increased demand for labor. According to the Fed, there was modest or stronger growth in 10 out of its 12 districts.
The reports from Epiq and from the Fed come amid anticipation that the Federal Reserve’s Open Market Committee will begin the process of raising interest rates — at or near zero for the past many years — at the Committee’s December 15 meeting in Washington, DC. As Fed Chair Janet Yellen has noted, waiting too long to end the era of near-zero interest rates might result in the Fed tightening too quickly and causing market dislocations.
On the other hand, once the Fed begins tightening the screws on interest rates, it is entirely unclear what effect this will have on bankruptcy filings. Right now, there are plenty of credit facilities out there in the economy that can be handled relatively easily at current interest rates, but may become ever so much dicier at higher rates. Or, to mangle the metaphor, one can quote from the Sage of Omaha Warren Buffett:
“Only when the tide goes out do you discover who’s been swimming naked.”
Do you have any feedback, thoughts, reactions or comments concerning the increase of business bankruptcy filings? Feel free to leave a comment below for Joel R. Glucksman of if you have any questions about this post or would like assistance with your legal needs, please contact me or the Scarinci Hollenbeck attorney with whom you work.
Understanding Chattel Paper: A Key Component in Secured Transactions
Using chattel paper to obtain a security interest in personal property is a powerful tool. It can ensure lenders have a legal claim on collateral ranging from inventory to intellectual property. To reduce risk and protect your legal rights, businesses and lenders should understand the legal framework. This framework governs the creation, sale, and enforcement […]
For years, digital assets operated in a legal gray area, a frontier where innovation outpaced the reach of regulators and law enforcement. In this early “Wild West” phase of finance, crypto startups thrived under minimal oversight. That era, however, is coming to an end. The importance of crypto compliance has become paramount as cryptocurrency has […]
Supreme Court and Title VII: Implications for Reverse Discrimination
Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]
Special purpose acquisition companies (better known as SPACs) appear to be making a comeback. SPAC offerings for 2025 have already nearly surpassed last year’s totals, with additional transactions in the pipeline. SPACs last experienced a boom between 2020–2021, with approximately 600 U.S. companies raising a record $163 billion in 2021. Notable companies that went public […]
Short Form Merger: Streamlining the Process for Businesses
Merging two companies is a complex legal and business transaction. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process that involves important corporate governance considerations. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process. However, […]
Tariff Response Options for Small Businesses Facing Financial Distress
The Trump Administration’s new tariffs are having an oversized impact on small businesses, which already tend to operate on razor thin margins. Many businesses have been forced to raise prices, find new suppliers, lay off staff, and delay growth plans. For businesses facing even more dire financial circumstances, there are additional tariff response options, including […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
