It may seem counterintuitive given the implication of bankruptcy, but a commercial, corporate or business bankruptcy can be an opportunity for the company in question. Now, obviously there are some serious financial and legal issues that need to be addressed if the company is filing for bankruptcy. But the filing can not only buy the company some time to deal with these things without their creditors taking action, it can also allow the company to reorganize itself or construct an exit strategy. Businesses in bankruptcy can sell their assets -- or even the entire business -- to successfully resolve their problems.
We bring all of this up in light of some new information regarding business bankruptcies in 2016 and bankruptcies in general. According to a new report, the number of business bankruptcies in 2016 increased by 26 percent when compared to 2015.
In 2015, there 29,920 business bankruptcy filings. In 2016, that number shot up to 37,771. Meanwhile, all bankruptcies in the United States remained relatively stable, with only a 6 percent decrease overall. In 2015, there were 819,431 total bankruptcies and in 2016, that number fell to 771,894.
With the Federal Reserve set to ramp up interest rates and the trend of business bankruptcies increasingly already, 2017 could be another year where many companies choose to file for bankruptcy. Only time will tell if that proves true, but in the meantime, companies should always be ready for potential legal issues.
Source: ABL Advisor, "Commercial Bankruptcy Filings Rise 26% in 2016," Jan. 6, 2017