Last month’s bankruptcies reached 3,072 to bring the year-to-date
total to 28,789 and marked the eleventh straight month of increases
from 2015, according to data from the American Bankruptcy Institute.
“Rising bankruptcies are an indicator that the ‘credit cycle’ has
ended,” Richter says in a commentary about the limits of the Federal
Reserve’s ability to help an economic recovery. “The Fed’s policy of
easy credit has encouraged businesses to borrow – those that could.
But by now, this six-year debt binge has created an ominous debt
overhang that is suffocating these businesses as they find
themselves, against all promises, mired in an economy that’s nothing
like the escape-velocity hype that had emanated from Wall Street,
the Fed and the government.”
The financial crisis of 2008, when Lehman Brothers Holdings
Inc. filed for the biggest bankruptcy of all time, triggered the
worst recession in 80 years and a major jump in bankruptcy
filings. Bankruptcies peaked at 9,004 in March 2010 and
proceeded to fall until November 2015, Richter says.
The
restaurant industry has been hit particularly hard
with bankruptcies following the filings of
Garden Fresh Corp., Cosi Inc., Logan’s Roadhouse.
“Nine restaurant companies representing 14 chains have filed
for bankruptcy since December: Garden Fresh Restaurant,
Restaurants Acquisitions, Cosi, Logan’s Roadhouse, Fox & Hound,
Champps, Bailey’s, Old Country Buffet, HomeTown Buffet, Ryan’s,
Johnny Carino’s, Quaker Steak & Lube, and Zio’s Italian
Kitchen,” Richter says.
© 2016 Newsmax Finance. All rights reserved.
