The Rising Bankruptcy Tide: Large Corporations Feeling the Squeeze in a Tough Economy

In recent months, a growing number of large corporations have filed for Chapter 11 bankruptcy, sparking a debate among legal and financial experts about the underlying causes. One such company is Red Lobster, which is reportedly considering restructuring through this process. This news was announced last week, adding to the list of companies struggling financially in the current economic climate.

Express and Tijuana Flats are two other companies that have recently declared bankruptcy. The latter will be closing ten of its Florida restaurants, including the Boynton Beach location. These filings highlight the financial pressures that many businesses are currently facing due to various factors.

Adam Marshall, an attorney with Lorium Law, explained how increasing interest rates have added to the financial strain on businesses. While overall interest rates remain low historically, recent increases have made borrowing money more expensive for many companies. This has compounded the challenges faced by businesses trying to manage their debt service obligations in light of the lingering impact of the pandemic.

Carl Gould concurred with Marshall’s assessment, noting that inflation and interest rate volatility are likely to continue affecting businesses going forward. As operating costs rise and borrowing money becomes increasingly expensive, many companies are finding it difficult to maintain profitability. This ripple effect of economic factors is contributing to the surge in bankruptcy filings among companies across different industries and sizes.

The Chapter 11 bankruptcy filings of these large corporations suggest that economic pressures are becoming more widespread than previously thought. As such, it’s important for businesses to carefully consider their financial position and plan accordingly in order to avoid similar pitfalls in the future.