As the pandemic persists, more and more companies have filed for bankruptcy protection, following in the footsteps of Hertz, J. Crew and Neiman Marcus. But financial restructuring advisers say that they expect filings to accelerate, according to a New York Times DealBook blog post. About 3,600 companies filed for chapter 11 in the first half of 2020, more than any year since 2012, according to the American Bankruptcy Institute. The past few weeks have brought filings by the fracking pioneer Chesapeake Energy, the Japanese home goods company Muji USA and the retailer New York & Company. But as to why cases dropped last month, Advisers cited the federal government’s programs for stabilizing the economy and credit markets, as well as efforts by companies to bolster their cash by drawing down their credit lines and issuing new bonds. (Businesses worldwide have sold $2.1 trillion worth of bonds so far this year, up 50 percent from the year before.) Earlier-than-expected reopenings have bolstered some businesses’ performance, allowing them to bring in some sales — critical to servicing their debts. Yet as coronavirus cases surge again, an uptick in filings may follow. The rise in infections brings the prospect of renewed lockdowns and shakes consumer confidence, testing companies’ abilities to survive another spell of little to no revenue. “We’re starting to see the pendulum swing back toward fear again,” William Hardie, a managing director in Houlihan Lokey’s financial restructuring group, told DealBook’s Michael de la Merced. And what comes next could be ugly. Many companies that saved themselves by borrowing more money are now in a bind: They have mortgaged nearly all their available assets, leaving little wiggle room.
