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Corporate bankruptcies rose significantly in the United States last year, with the healthcare industry hardest hit, new data shows.
According to Debtwire’s latest Restructuring Insights report, the number of bankruptcy filings increased by 58% in 2023, to 282 from 179 in 2022. Bankruptcies in the healthcare sector jumped 117%, accounting for 21% of all bankruptcies.
A customer inside a Rite Aid store in New York on October 16, 2023. (Bing Guan/via Bloomberg/Getty Images)
The analysis pointed to examples such as Envision Healthcare, which filed for bankruptcy protection with about $9.4 billion in debt, and Aucmin, which owed $1.3 billion when it went bankrupt.
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Kathryn Corley, global head of restructuring data at Debtwire, said these large-scale cases “defined the landscape of restructuring last year and highlighted persistent challenges in the health sector.”
“Decreasing patient volumes, inadequate Medicare and Medicaid reimbursement rates, and staffing shortages due to demands for higher wages are exacerbating the industry’s financial challenges,” Cawley said in a statement explaining the study’s findings.
July 24, 2023, Evergrande real estate complex in Yichang City, Hubei Province, China. (Costfoto/NurPhoto via / Getty Images)
The real estate industry had the second largest number of applications after the medical industry, accounting for 11% of the total. The biggest case is Chinese real estate giant Evergrande, which filed for Chapter 15 bankruptcy protection in a Manhattan court last summer, but the $38.86 billion it filed for was tied to other companies listed in the report. Far less than a lawsuit.
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Another real estate company featured in the report is long-struggling shared-office giant WeWork, which also filed for bankruptcy last year. It was once valued at an estimated $47 billion.
WeWork logo on an office building in Tel Aviv, Israel, December 29, 2022. (Jakub Porzycki/NurPhoto via / Getty Images)
Other notable bankruptcies last year included pharmacy chain Rite Aid, trucking giant Yellow Corporation and Silicon Valley Bank.
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“The 58% jump in bankruptcies in 2023 signals a significant shift in lender attitudes, with lenders becoming more reluctant to extend support to distressed companies.” Corey said. “The combination of post-pandemic challenges such as the end of government support, inflation, rising interest rates, supply chain disruptions, global uncertainty and stricter lending requirements has created a perfect storm.”
