A higher-for-longer interest rate environment has sent many companies reeling, as corporate bankruptcies hit a high in June. The data came during concerns about the U.S. economy slowing.
What Happened: A post on X relayed data from an S&P Global report on corporate bankruptcy.
Electric vehicle manufacturer Fisker Inc. and Redbox parent company Chicken Soup for the Soul Entertainment Inc. were among the most notable companies to file for bankruptcy in June.
According to S&P Global’s report, the 346 bankruptcies in 2024 year-to-date are the highest since 2010. The 2010 figure of 467 bankruptcies came in the aftermath of the 2008 financial crisis.
The consumer discretionary sector saw the most bankruptcies, 55 in total, through the first half of 2024. Healthcare and industrials both had 40 filings.
Why it Matters: Companies file bankruptcy for various reasons, but recent trends seem to be tied to high interest rates set by the Federal Reserve and rising wages. Corporations straddled with debt were simply unable to pay it off.
The year 2023 saw 635 bankruptcies, with WeWork and Bed Bath and Beyond among the most notable.
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