A surge in new corporate bankruptcy in the United States in June added to an already rapid pace of filings this year, underscoring the challenging economic conditions and increased interest rates that businesses are confronting.
S&P Global Market Intelligence recorded 54 corporate bankruptcy filings during June, unchanged from 54 in May but still notably above most months in 2021 and 2022. Total filings for the first half of the year eclipsed those of any other comparable period since 2010, including the rush of filings during the first half of 2020.
Lordstown Motors Corp. filed for bankruptcy June 27, with plans to restructure its business and seek a buyer, according to a company release. The electric vehicle manufacturer’s assets include its Endurance pickup truck and related resources.
In announcing its bankruptcy, Lordstown also disclosed a lawsuit against electronics manufacturer Hon Hai Precision Industry Co. Ltd., or Foxconn, alleging fraud and contractual breaches related to a strategic partnership between the companies. In response, Foxconn said June 28 that it suspended further negotiations with Lordstown and reserves the right to pursue legal actions over what it called “false comments and malicious attacks” by Lordstown.
Instant Brands Acquisition Holdings Inc. also sought bankruptcy protection June 12. The tightening of credit terms and higher interest rates had impacted the company’s liquidity levels, according to an official release. The company has also already secured $132.5 million from existing lenders and plans to continue discussions with its financial stakeholders.
In the first half of the year, a total of 15 companies with over $1 billion in liabilities filed for bankruptcy. Four of those companies filed in June, making it the month with the most bankruptcy filings so far this year. April and May each saw three such filings, respectively.
Companies in the consumer discretionary sector continued to account for more bankruptcy filings than any other sector, registering 45 for the first half of the year.
The industrial and healthcare sectors also saw a sizable bump in filings, rising by six to 37 and by seven to 32, respectively, in June.
Home arcade machine seller iiRcade Inc., media company iMedia Brands Inc. and health and wellness retailer Golden Developing Solutions Inc. all filed for bankruptcy over the past 30 days through July 18. All three companies offer their products online, while iMedia Brands also operates television shopping networks.
As of July 18, 18 retailers filed for bankruptcy, more than the yearly total for 2021 and 2022 but only half the number of bankruptcies over the same period in 2020.
Bankruptcy figures include public companies or private companies with public debt with a minimum of $2 million in assets or liabilities at the time of filing, in addition to private companies with at least $10 million in assets or liabilities.