U.S. Bankruptcy Filings Set to Increase in 2022 After a Lull This Year
After a significant slowdown in 2021, U.S. corporate bankruptcies are likely to speed up in 2022, according to S&P Global Market Intelligence data.
Thirty two companies began bankruptcy proceedings in September, down from 36 who began the process in August. Since January, there have been 334 corporate bankruptcy filings, which marks the lowest number of bankruptcy filings since 2010.
More from Footwear News
Jessica Simpson Nears Deal to Buy Back Brand in Sequential Bankruptcy
After Sequential Goes Bankrupt, Jessica Simpson Is in Talks to Buy Back Her Brand
Despite the dip in 2021, experts predict that 2022 will bring about a new wave of bankruptcies, as money from the federal stimulus and lenders begins to run out. Due to supply chain slowdowns and factory shutdowns, many retail companies will face inventory shortages during the crucial holiday season, which could make it difficult to reach revenue targets this year. The impact from the season could carry over to next year and incite a new wave of bankruptcy filings for vulnerable retailers.
Experts predict that smaller companies will be more at risk than larger, public companies, due to their limited access to capital markets.
In 2020, 633 companies filed for bankruptcy, marking the highest number of corporate bankruptcies since the financial crisis in 2010. Across retail, companies such as Century 21, Ascena, Francesca’s, Lucky Brand, G-Star Raw, J.C. Penney, True Religion, and J. Crew were among those who entered bankruptcy proceedings in 2020, in part due to store shutdowns and other challenges from the coronavirus pandemic.
In 2021, notable retail bankruptcies have included Sequential Brands Group, Global Brands USA, and Belk. Overall, the year has been marked by a large wave of store closures. As of Sept., major U.S. retailers had announced 4,844 store closures so far in 2021, compared to 2,191 closures last year, according to a report from Coresight Research.
On top of the closures, the retail industry is experiencing a labor shortage. In June, 632,000 workers quit retail jobs. To attract new talent, companies such as Lululemon, Under Armour, Tapestry and more have announced wage increases in recent months.
Sign up for FN's Newsletter. For the latest news, follow us on Facebook, Twitter, and Instagram.
