The number of applications for “voluntary” bankruptcy in the United States increased by 26% this year.
American companies file such applications under Chapter 11 of the Bankruptcy Code. Usually they do this to protect themselves from creditors and to avoid the sale of assets and liquidation of the company.
Filing a bankruptcy application does not mean that the company will actually go bankrupt. For example, the gas company Pacific Gas and Electric Company, after filing an application, agreed with creditors on debt restructuring, received financing. And now formally out of bankruptcy.
In the US courts in 2020, for the first half a year, 3,604 enterprises filed a petition under Chapter 11 of the Bankruptcy Code, which is 26% more than last year, writes Seeking Alpha.
Among the high-profile applications are JCPenney, Hertz, Chesapeake Energy, Quorum Health, Pier 1 Imports, Frontier Communications, 24 Hour Fitness, J. Crew and CEC Entertainment.
Despite the increase in the number of such applications, employee reductions directly related to bankruptcies are less frequent than in the first half of 2019. But, most likely, they just did not manage to be reflected in statistics yet. And in the second half of the year there will be many more layoffs.