Corporate bankruptcies hit a new low in January, falling to the lowest total for the same month in at least 13 years, according to S&P Global Market Intelligence data.
The 31 filings in January dropped from 39 a month earlier and 44 from January 2021. The slowdown comes after a drop in corporate bankruptcies in 2021, which will likely continue for much of the year. Companies are avoiding courtrooms amid friendly credit conditions and previous rounds of pandemic-era federal aid.
Healthcare troubles
The healthcare sector had the most bankruptcies in January 2022 at six filings.
Staffing shortages prompted by the pandemic have hammered healthcare industries. The sector has also struggled as elective procedures were canceled due to a lack of staff, resources and patients not wanting to go to the hospital during the pandemic.
The consumer discretionary sector, which largely includes businesses that sell goods and services viewed as nonessential, was hit hard by the pandemic as restrictions and worries about getting sick curbed consumer spending and outings. The sector recorded two bankruptcies in January.
Sales growth for restaurants, one of the consumer discretionary industries most affected by the pandemic, could improve in the coming weeks as omicron cases decline and consumers feel more comfortable dining out, UBS analysts said in a Feb. 7 note.
Bankruptcy slowdown
The pace of corporate bankruptcy filings is expected to stay slow through 2022, experts have said. Corporate defaults are also slowing, with just five year-to-date as of Feb. 2, according to S&P Global Ratings. That is the lowest for the period since 2014, Nicole Serino, associate director of credit markets research for Ratings, said in a Feb. 7 note.
Bankruptcy experts expect lenders will be lenient with their borrowers until the uncertainty of the pandemic subsides.
Editor's note: This Data Dispatch is updated on a regular basis and the last edition was published Jan. 13.
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. Market Intelligence may remove companies from this list if it discovers that their total assets and liabilities do not meet the threshold requirement for inclusion.
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