Business Bankruptcies Reach Record Highs Amid Pandemic

More U.S. businesses filed bankruptcy in 2020 amid the coronavirus pandemic than in any other year since 2009. Energy, retail and consumer services companies filed the largest number of bankruptcies last year: 244. Bankruptcy experts expect the high number of business bankruptcies to continue into early 2021, as more businesses run out of money during the ongoing pandemic.

Industries vulnerable for 2021 filings

Experts believe the following industries are most vulnerable for bankruptcies in 2021:

  • Energy
  • Consumer service
  • Retail
  • Travel

Twenty-seven retailers filed bankruptcy in 2020, including J.C. Penney, Brooks Brothers and Nieman Marcus. Gyms and movie theaters also are vulnerable for bankruptcy in 2021 as people continue to stay home more than go out.

Another area that may see more business bankruptcy filings in 2021 is real estate. Landlords may find themselves facing large debts as rent relief measures end.

Small business debt relief ending soon

For small businesses, the Coronavirus Aid, Relief and Economic Security Act (CARES) of 2020 allowed them to carry up to $7.5 million in debt. However, that high debt ceiling will end in February 2021. With the increase in debt small businesses could carry, they could restructure their debt, hopefully to avoid bankruptcy.

If your business continues to struggle in 2021 in the economic downturn, you should consider consulting a bankruptcy attorney for help. You can learn more about your business’ debt relief options in this difficult economic climate.