Chapter 11 bankruptcy filings have surged among several large companies in recent times, including Red Lobster, Express, and Tijuana Flats. These businesses are facing financial challenges that have led them to restructure through bankruptcy.
A variety of factors have contributed to this increase in bankruptcy filings. One major factor is the rise in interest rates. Adam Marshall, an attorney with Lorium Law, pointed out that even though interest rates are still historically low, they have increased recently. This has made the cost of borrowing money more expensive for businesses, impacting their ability to meet their debt obligations.
Inflation has also had a significant impact on businesses. As prices rise and operating costs increase, businesses are finding it difficult to cover their debt service. Business analyst Carl Gould, founder of 7 Stage Advisors, highlighted this trend as a major contributor to the increase in bankruptcy filings. He believes that as long as interest rates and inflation remain volatile, businesses will continue to struggle to adapt to changing financial conditions.
The closures and restructuring of these companies serve as a reminder of the challenges that many businesses are facing in the current economic environment. As businesses struggle to adapt to changing financial conditions, bankruptcy filings are becoming a more common occurrence. The ripple effect of these challenges is being felt across industries, leading to an increase in Chapter 11 filings.
Overall, the surge in Chapter 11 bankruptcy filings among large companies highlights the ongoing financial struggles faced by many businesses in today’s economy. Despite historically low interest rates and other economic factors that may seem favorable on paper, many companies are still struggling to meet their financial obligations due to rising costs and inflationary pressures.
As such, it is important for business leaders and investors alike to be aware of these challenges and take steps to mitigate them before they become insurmountable. Whether through strategic planning or seeking out expert advice from professionals like Adam Marshall or Carl Gould
