Business Bankruptcy, COVID-19

Wave of COVID-19 Bankruptcies Hitting U.S. Bankruptcy Courts

As the country nears the one-year mark since the start of the COVID-19 pandemic, the financial effects are continuing to have effect on consumers and small businesses. The pandemic forced the shutdown of countless businesses throughout the country, and the expected wave of impending Chapter 11 bankruptcy cases is only now beginning to hit the nation’s legal system.  

According to court records, the number of Chapter 11 bankruptcy filings were up by approximately 20 percent, when compared to filings in 2019. These numbers are only expected to grow. 

Certain sectors of the economy have been hit much harder than others. According to figures from New Generation Research, restaurants, retailers, entertainment companies, and real estate firms have filed for bankruptcy protection more now than in previous years. The number of bankruptcy filings made by entertainment companies quadrupled in 2020 alone. The number of filings has tripled for oil and gas companies, while doubling for restaurant owners, retailers, and real estate companies. 

Thus far, more than $3.7 trillion in federal stimulus money has been issued in an effort to help offset the damage caused by the COVID-19 pandemic. Even with this money and the possibility of more coming in the future, many businesses have not been able to survive.  

The true effects of the pandemic may not be seen for several years. After the Great Recession of 2007, the bankruptcies that resulted were not filed until 2010, a few years after the start of the recession 

The widespread shutdowns brought on by COVID-19 have hit the restaurant industry hard, and financial experts worry that they may be the hardest hit from the financial crisis. The route these businesses will take can vary depending on what the businesses owners have decided to do. Many of them have already made the decision to close down completely in lieu of pursuing a business bankruptcy. Others have chosen to file for Chapter 7 bankruptcy, meaning that their assets will be liquidated and used to pay down the debts, leaving the restaurants permanently closed. 

With so many people working from home, the need for office space has also dropped off dramatically, leading to a drop in real estate values for both retail and office spaces, hitting the real estate sector, as well. 

Some of the larger chain retailers who have filed for Chapter 11 bankruptcy over the summer of 2021 include J. Crew, Neiman Marcus, J.C. Penney, Brooks Brothers, and Lord and Taylor. According to S&P Global, there was an average of two corporate bankruptcy filings per day in the months of June and July.       

Not only have retailers been hit hard but their suppliers have, as well. An example of this is Country Fresh, a supplier of fresh fruit snacks, sides, soups, and salads to convenience stores, filed for Chapter 11 bankruptcy mid-February 2021. This filing represents just one of the many suppliers who have been hit hard and are still struggling from the pandemic. It remains to be seen whether more filings will follow as 2021 progresses.   

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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.   

 

Bankruptcy Law, COVID-19, Medical Debt, student loan debt

Bankruptcy Reform Bill Proposed that will Discharge Student Loans and Medical Debt

The Medical Bankruptcy Fairness Act of 2021 was unveiled by Democratic Senators this week in response to the economic impact of the Covid-19 pandemic. The bill would make substantial reforms to the current bankruptcy code, making it easier for those struggling with student loan debt and medical debt to discharge the same in bankruptcy.

Currently, the bankruptcy code treats student loan debt differently from other types of consumer debt. Borrowers must show they meet the ‘undue hardship’ requirement in order to discharge their student loan debt in bankruptcy.

COVID-19, Debt Relief, Foreclosures

Biden Extends Ban on Evictions and Foreclosures through March

Shortly after being sworn in as the nation’s 46th president, Joe Biden signed several executive orders. One of these signed orders included extending the ban on evictions and foreclosures for individuals affected by the COVID-19 crisis.

This new order extends the Centers for Disease Control and Prevention’s (CDC) moratorium that was set to expire on January 31, 2021. The CDC’s order first went into effect in September 2020. This new executive order extends the ban for at least an additional two months past the expiration date.

Coronavirus, COVID-19, Debt Relief

Floridians Hope to Receive Relief from Second Round of Stimulus Payments

As coronavirus (COVID-19) continues to affect the economy, many have been wondering when another relief package would be passed by Congress. After the CARES Act was passed in March 2020, providing the first source of stimulus payments, consumers have been anticipating a second source of stimulus payments to help during their continuing financial struggles. Fortunately, at the end of December 2020, a second stimulus relief package was passed by Congress and signed by the President, providing them with a sense of reprieve.

As compared the $2 trillion CARES Act passed last March, this second package totals $900 billion. Additionally, while the previous package provided $1,200 per taxpayer, this new bill provides $600 per individual making less than $75,000 annually. The new legislation provides $600 per child, while the previous legislation provided $100 less per child.  

COVID-19, Credit Card Debt

Credit Card Debt Falls 9 Percent Despite Decline in Economic Conditions

The coronavirus (COVID-19) pandemic has hit the country’s economy hard, but this fact does not seem to be reflected in the nation’s credit card debt According to statistics from credit reporting agency, Experian, credit card balances have declined at a record rate in 2020.  

Economic crises tend to lead to a change in consumer behavior. World War II pushed consumers to change their spending habits in ways they had not done before. The COVID-19 pandemic with forced lockdowns and widespread unemployment has likewise put things into perspective for American consumers, pushing them to change their spending habits, as well, including how they use their credit cards.  

Bankruptcy Law, COVID-19

November Personal Bankruptcy Filings Drop to a 14-Year Low

Personal bankruptcy filings reported in the country for the month of November hit a low not seen in 14 years. Financial analysts believe the drop in personal bankruptcy filings can be attributed to the current national and statewide moratoriums on evictions and foreclosures, as well as the availability of governmental stimulus aid related to the coronavirus (COVID-19) pandemic.

According to figures from the legal services provider, Epiq Systems, Inc., the total number of personal bankruptcy filings in the month of November amounted to 34,440 filings. This is the lowest monthly total reported since January 2006.  

Coronavirus, COVID-19, Credit Card Debt

More Americans Paying Rent on Credit Cards with No Second Stimulus Relief Bill in Sight

The coronavirus (COVID-19) pandemic has hit the country hard.  Many people have been left with no choice but to use their credit cards to pay for basic living expenses, including their rent. Financial analysts fear that this trend could be a warning sign that, without a second stimulus relief package from Congress, the nation’s economy is heading towards another crisis.  

According to statistics from the Federal Reserve Bank of Philadelphia, an increase of approximately 70 percent has been reported on the number of consumers using their credit cards to pay their rent. What this indicates is that the person using their credit to pay for the most basic of living expenses is significantly struggling, does not have any savings to pay for unexpected expenses, and is at risk of losing his or her home.  

Business Bankruptcy, COVID-19

Stimulus Relief Fails to Save Hundreds of Businesses

The financial ramifications of the COVID-19 pandemic have been significant for countless businesses throughout the United States.  At the start of the pandemic, federal stimulus funds were issued in various forms to help businesses survive the economic crisis. However, as the virus continues, many of these businesses are being forced to close.  

According to a Wall Street Journal analysis of legal filings and government data, over 300 U.S. companies that received approximately half a billion dollars in stimulus relief have also filed for bankruptcy this year. These 300 companies employ a total of 23,400 workers who are being adversely affected.  

Coronavirus, COVID-19, Credit Card Debt

How the Pandemic is Changing Americans’ Credit Card Habits

The coronavirus (COVID-19) pandemic has changed the way of life for consumers in both good and bad ways. One change has to do with the way Americans utilize their credit cards post-pandemic. 

A recent study conducted by Money and Morning Consult surveyed how American consumers have been using their credit cards during this crisis. What the study found was Americans are continuing to use their cards. However, the way by which they are using their cards has changed.  

Business Bankruptcy, Coronavirus, COVID-19

Growing Number of Retailers and Restaurants Are Folding as the Covid-19 Pandemic Continues

Retailers and small businesses have been hit hard by the pandemic, after facing a brutal 2019.  Now a growing number of businesses and restaurants are folding, as Covid-19 continues to wreak havoc on the retail, restuarant industry and the global economy.

Here are the latest ‘big-name’ companies to file bankruptcy since mid-March.

Ruby Tuesday is the most recent restaurant to file for Chapter 11 bankruptcy.  It will permanently close 185 restaurants while it restructures.