Eighteen percent more US firms filed for bankruptcy on the higher interest rates, but they are expected to remain high when Fed signifies that the rate cut will start this year.
US bankruptcy filings surged by 18 percent in 2023 on the back of higher interest rates, tougher lending standards and the continued runoff of pandemic-era backstops, data published Wednesday showed, although insolvency case volumes remain well below the level seen before the outbreak.
Total bankruptcy filings - encompassing commercial and personal insolvencies - rose to 445,186 last year from 378,390 in 2022, according to bankruptcy data provided by Epiq AACER.
Commercial Chapter 11 business reorganization filings shot up by 72 percent to 6,569 from 3,819 the year before, the report said. Consumer filings rose 18 percent to 419,559 from 356,911 in 2022.
For the final month of the year, total filings dipped to 34,447 from 37,860 in November, though they were up 16 percent from a year earlier.
Bankruptcy cases are expected to keep climbing this year, though there is still some distance to go to top the 757,816 bankruptcies filed in 2019, the year before the pandemic struck.
Federal Reserve policymakers led by chairman Jerome Powel agreed last month that it would be appropriate to maintain a restrictive stance "for some time," while acknowledging they were probably at the peak rate and would begin cutting soon.
