BY Fraser Tennant
US business bankruptcy activity in 2017 is continuing on an trend upward, with Q2 experiencing a 10 percent increase in filings over Q1 according to new data compiled by BankruptcyData.com.
In ‘Quarterly Report of Business Bankruptcy Filings for the Period Ending June 30, 2017’, the business bankruptcy information provider analyses Q2 and year-to-date (YTD) 2017 business bankruptcy activity and breaks down the filings by various factors, such as industry, sales volume, company size, creditor, liabilities, assets, employees, creditors and public and private filings
Reflecting on a fluctuating bankruptcy landscape, the report notes that the 2017 YTD business bankruptcy filing figure increased by 1 percent compared to the first six months of 2016, but rose 35 percent compared to the first six months of 2015. Small businesses are also shown to be making up the lion's share of all business bankruptcy filings for 2017. Companies with sales of $500,000 or less generated 56 percent of all filings during Q2 and 61 percent YTD.
In addition, although overall bankruptcy activity is rising, public company bankruptcies are down 30 percent so far in 2017; 43 public companies having filed for bankruptcy in the first six months of 2017, compared to 61 over the same period in 2016.
In terms of industry hotspots, despite a lot of attention being paid to the bankruptcy woes of the retail industry in 2017 (more than 300 retailers have filed for Chapter 11 so far this year), it is actually the energy sector that has continued to dominate, with 16 of 43 (37 percent) of public company bankruptcies coming from the oil & gas, mining and other energy sectors. Turning to location hotspots, Texas overtook New York as the state generating the highest percentage of overall business bankruptcies during Q2 2017.
“2017's US Bankruptcy Court business filing activity is shaping up as we expected, with counts at or slightly above the 2016 levels but significantly above 2015 and earlier,” states the BankruptcyData.com report. “The energy sector, though slowing down, is not out of the woods yet. We also expect retail bankruptcy levels to keep increasing as consumers continue to opt for online over brick-and-mortar purchases in this highly competitive sector that is already besieged by liquidity issues, ailing credit ratings, unfavourable borrowing terms and more.”
Against a dramatically changing corporate landscape, US business bankruptcy activity is continuing to escalate; with many more companies likely to be navigating the filing process before 2017 comes to an end.