This major bankruptcy rate is the third worst start to the year since 2000, surpassed only in 2009 during the height of the Great Recession and in 2020 during the upheaval caused by economic lockdowns.
In 2009, from January to April there were 118 bankruptcies. During the same period in 2020, there were 71. (Related: Corporate America experiencing BANKRUPTCY BOOM as recession looms.)
According to the business analytics platform and market intelligence company CB Insights, there have also been about 84 other notable bankruptcies, most of which are in the world of retail, as the cascade of economic crises that have been hitting the U.S. since 2020 compound on the issues faced by retailers.
These issues include struggling physical storefronts, massive debts and inefficient operations, which were made worse with growing debts and dwindling sales in the years prior to this one as consumer preferences change, but many major, regional and minor retailers struggle to keep up with the rapidly shifting market.
From January to April, several major companies stood out for declaring bankruptcy during this period: Forma Brands, Party City, Serta Simmon Bedding, Tuesday Morning, Independent Pet Partners and Bed Bath & Beyond.
Forma Brands, the beauty conglomerate and parent company of brands like Morphe, Lipstick Queen and Bad Habits, filed for Chapter 11 bankruptcy in January after struggling for years to remain sufficiently profitable. Since 2020, most of its brands have been struggling to hit revenue projections, and its brick-and-mortar operations eventually had to be shuttered. Since filing for bankruptcy, the company has entered into an acquisition deal that would see lenders take over its wholesale operations, online platforms and international stores.
Party supply retailer Party City followed suit in mid-January with its own Chapter 11 filing. The narrow offerings of the company have made it difficult to keep up with competition from big box and online retailers. The company is still running operations while it restructures its whopping $1.7 billion debt, but it is likely very few of its stores will remain open at the end of the company's ordeal.
Beddings and accessories company Serta Simmons Bedding also filed for Chapter 11 protections in January. The company is already struggling with ongoing litigation over its misuse of emergency relief funding. On top of that, low sales due to recent macroeconomic turbulence left the company with a nearly $2 billion debt load it is attempting to restructure to just $300 million.
Tuesday Morning, a Dallas-based discount household merchandise store, filed for bankruptcy in February. This is the second time it has filed for bankruptcy since 2020, when it went through the proceedings due to lockdown-induced store closures, at which time it shut down a number of locations in a restructuring process. This did not save the company, as the combination of continued decreased consumer spending and high interest rates means this new restructuring process could close each one of the company's unprofitable and underperforming stores.
Pet industry conglomerate Independent Pet Partners, the parent company of brands like Natural Pawz and Kriser's, filed for Chapter 11 bankruptcy soon after Tuesday Morning. The company reported that it was losing a significant amount of sales, especially as consumers shift away from the grain-free, high-protein dog food the company sells in its stores. As part of the restructuring, the company is selling some of its brands and closing many of its stores.
Finally, the home goods giant Bed Bath & Beyond filed for bankruptcy in late April despite growing its physical footprint in the prior years in a failed attempt to compete with big box stores. This, along with supply chain disruptions, the growing dominance of e-commerce, declining revenues and growing debt forced the company into bankruptcy. This comes after it narrowly avoided filing for Chapter 11 protections in February.
Learn more about the fragile state of the American economy at EconomicRiot.com.
Watch this clip from the "Worldview Report" discussing how bankruptcies in corporate America are once again on the rise after a two-year lull.