Businesses throughout the nation are dealing with an uncertain future due to the ongoing national health situation. This and other factors have resulted in many businesses facing challenges in remaining viable. The government has offered financial lifelines to many businesses, but the future remains uncertain.
March saw a rise in bankruptcy filings across the U.S.
In 2020, bankruptcies were on the decline. Now that trend is slowly reversing, and more businesses are pursing filings for financial relief. According to Epiq, there were more than 43,400 bankruptcy filings across the various chapters in March. This was the highest spike in a year.
In the first quarter of 2021, there were nearly 107,000 filings. Most of the filings in March 2021 were consumer cases under Chapter 7 and Chapter 13. There was a reduction in Chapter 11 business reorganization filings with 9% less in March than there were in February. While personal bankruptcies are likely due to job loss and people trying to avoid losing their homes, there are many reasons people might want to file whether it is personal or business-related. As society slowly returns to normal, experts think there may be a noticeable spike in filings as the financial aftermath becomes clearer and less government assistance is available.
Business owners should know the benefits of bankruptcy
Many business owners who were able to stave off bankruptcy in the past may find themselves struggling to find options to get into a better financial circumstance. Bankruptcy is frequently misunderstood by those who are unaware of its benefits. In truth, a business might need to shutter if the person chooses to file for a liquidation via Chapter 7. However, Chapter 11 might be a useful option for people who want to restructure their debts and move forward with its operation.
Every business bankruptcy situation is different, and the current circumstances are so unusual that business owners should be cognizant of options. Even people who do not believe they fit the profile of a successful bankruptcy could be surprised at its benefits. Consulting with experienced professionals can provide information as to the preferable strategies and help with taking the next step.