Dozens of Large Corporations in the US Bankrupt and File for Bankruptcy Page all

NEW YORK, KOMPAS.com – Corona virus pandemic (Covid-19) causes recession in countries, countries around the world, including the United States. In fact, the US economy had fallen by more than 30 percent on an annual basis in the second quarter of this year.

Many companies in Uncle Sam’s country also went bankrupt and filed for bankruptcy due to not being able to survive the recession caused by the pandemic.

Quoted from CNN, Monday (9/14/2020) the bankruptcy rate of large companies in the US increased by 244 percent from July to August when compared to the same period last year.

Also read: Know the difference between bankruptcy and bankruptcy

Conditions have not changed much even though the local government and The Fed have poured various stimuli for the economy.

Several large companies are known to have filed for bankruptcy such as Brooks Brothers, Hertz, California Pizza Kitchen, and Chuck E, Cheese. In addition, there are many other companies that have filed similar proposals since the beginning of this summer.

However, there are several corporations such as decoration and home furnishing company JCPenney that have managed to find investors to save the company from bankruptcy.

US investment bank Jefferies said there were several business sectors that had been hit hard and experienced a surge in filing for bankruptcy documents.

One of them, the bankruptcy rate in the aviation industry which skyrocketed to 110 percent, while in the oil and gas industry, which increased by 45 percent. Meanwhile, for the entertainment industry, the number of bankruptcy documents filed reached 22 percent.

Many people also think that this bankruptcy surge has not yet reached its peak.

“It has not yet reached its highest point. A new tipping point will occur when the government begins to stop the stimulus package,” said Joseph Acosta, a partner at Dorsey & Whitney who focuses on bankruptcy issues.

By the end of August, bankruptcy filings by large companies, namely companies with liabilities of up to billions of US dollars, had increased by 120 percent (yoy).

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This number includes 34 bankruptcy filing documents that were filed in the period from May to June.

On the other hand, Jefferies noted that the bankruptcy filings were quite small from middle to low-income companies. They suspect this happened thanks to an injection of aid funds for the industrial sector from the US central bank, The Federal Reserve.

Another assumption is that small and medium scale companies are unable to cover the costs of filing for bankruptcy.

“Perhaps also because there is insufficient cash / liquidity difference to hire a bankruptcy attorney,” explained Jefferies Banking Analyst Ken Usdin.

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