Bankruptcy filings in the United States hit their lowest in 35 years thanks to government help in a pandemic
WASHINGTON (Reuters) – U.S. bankruptcy filings for 2020 hit their lowest level since 1986, a flood of government support programs at least temporarily offsetting the brunt of the coronavirus pandemic and related recession, Epiq AACER reported on Friday.
The compilation of the company’s bankruptcy cases showed that Chapter 11 filings used to reorganize large companies jumped a further 29% in 2020 to 7,128, from 5,158 in 2019, a tally that included large retailers like JC Penney, driven by the biggest economic downturn in a century. .
But the total number of filings, including all personal and other business bankruptcies, for the year stood at 529,068, up from nearly 800,000 per year in recent years, and triple that of 2010 at the end of 2010. the last recession.
The low level of bankruptcies has been one of the most puzzling dynamics of an era of pandemic that has seen millions of jobs destroyed, record numbers of people collecting unemployment insurance and small businesses forced to close to fight against the spread of the coronavirus.
Government unemployment insurance, business loans and other programs ended up replacing much of this lost income, pushing savings to record levels and keeping households and businesses afloat – at least for the better. the moment.
An additional $ 900 billion recently approved by Congress could continue to push the accounts forward.
But Epiq AACER senior vice president Chris Kruse said in a press release that he expects household deposits and other non-commercial deposits “to increase significantly in the second half of 2021,” as government programs end and debts of the last few months fall due.
While many households have used government stimulus or increased unemployment benefits to pay off debts, for example, others are racking up obligations by delaying rent and mortgage payments.
Reporting by Howard Schneider; Editing by Chizu Nomiyama and Lisa Shumaker