Pandemic Bankruptcy Battles: Looking Back and Beyond


2022: Predictions of Bankruptcy

There are many unanswered questions as the disease continues to spread but, overall, people are back to work and considering the reality of the economy’s slow recovery. Organizations that have lost aid or were waiting to see how the situation would unfold now must make difficult financial choices. In many cases, restructuring may be the best option to ensure that operations continue to run smoothly or avoid a loss that is crippling. These are some 2022 forecasts that are based on the pandemic of bankruptcy observed so far:

  • The economy is expected to recover gradually but in waves. Companies operating in industries where the identified risk factors for bankruptcy are more severe are likely to see the highest number of filings this year, and in the near future until the effects of the pandemic subside and the economy improves. The risk factors are labor shortages, disruptions to supply chains as well as interest rate hikes along with price inflation and the absence of virtual services. Coronavirus outbreaks are also a risk when operating on models that require physical presence since many of the travel and entertainment sectors are hanging on by the thread of. In taking all of these aspects into consideration and weighing the risks, the sectors most susceptible to bankruptcies are hospitality, retail and travel.
  • Healthcare has been an essential sector in the aftermath of the pandemic because there is an urgent demand for hospitals as well as other medical facilities to stay afloat in times of emergency. Healthcare bankruptcy filings were relatively minimal in 2021 with just 13 filings for firms with debts of more than 10 million dollars. One of the most significant filed in 2021 came from Golf Coast Health Care, LLC that runs 28 skilled and assisted nursing facilities across Florida, Georgia, and Mississippi. The sector was however facing financial strains prior to the pandemic and hospitals as well as healthcare revenues have dipped dramatically due to COVID 19 and the COVID 19 epidemic. Hospitals have delayed elective surgery and some are putting off screenings in addition to the primary and specialty care visits. However the price of purchasing PPE and other medical equipment has risen dramatically. The companies that were capable of delaying any restructuring plan may have to consider bankruptcy options in the coming year.
  • Certain analysts believe that there’s a student loan bubble that is about to pop. Federal student loan payments were delayed again until the month of May and it’s unclear if there is going to be another extension or if payments will be resumed at some point during the year. If there’s no extension, a reasonable prediction could be that the bubble popping idea could become a reality. Inflation, as well as other individual debts coming due and owing, will make it difficult for many people to make these payment in the same manner they might have been prior to the pandemic.

This is the time for companies to take a close look at their financial condition and devise a sustainable plan. The bankruptcy process can be an effective option to consolidate the burden of debt and to strengthen operations in order to get on a chance of financial success.

If you enjoyed this article, take a look at “The Future of Students” loans and Bankruptcy Is there an upcoming bubble that is waiting to burst?

Note: The Statistical Commercial Bankruptcy filing data shared is provided via Epiq’s bankruptcy analytics.


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