The Blubber

Per BI

While the peak of the pandemic saw multiple small businesses file for bankruptcy, that rate of them filing for bankruptcy was taken over by current numbers. At the pandemic's peak, the four-week moving average was just 4.5% in June 2020, but in late February, the number reached 7.8%.

UBS head of credit strategy, Matthew Mish, gave a statement regarding their take on the situation. They noted that they saw record-high bankruptcy filings, specifically in "small- to mid-sized private businesses."

Mish: ["We] believe one of the more underappreciated signs of distress in US corporate credit is already emanating from the Small and Mid-size Enterprises sector,"

It was also mentioned that small firms are experiencing the most pressure from three different economic factors. The ones specified were rising rates, slowing growth, and persistent inflation.

The UBS Evidence Lab Corporate Bankruptcy Monitor reportedly keeps track of bankruptcy filings, specifically Chapter 7, 11, and 15. They spotted a lot of filings in these four sectors.

• Real estate
• Chemicals
• Healthcare
• Retail Industries

Neel Kashkari, the President of the Federal Reserve Bank of Minneapolis, gave a statement regarding their take on the situation and how it would affect the US economy.

Kashkari: "What's unclear right now is how much of the banking stresses of the past few weeks is leading to a sustained credit crunch which would then slow down the US economy,"

It was noted that 37% of small businesses could not pay their full rent in October. This segment of small businesses was reportedly responsible for employing half of all Americans.

In February, the Supreme Court ruled that businesses that file for bankruptcy can't avoid debt "incurred by another's fraud." this meant that not all debts were "dischargeable."

See flow at unusualwhales.com/flow.

Other News:

• About 37% of small businesses, which between them employ almost half of all Americans working in the private sector, were unable to pay their rent in full in October
• Supreme Court has ruled 9 to 0 that bankruptcy filers can’t avoid debt incurred by another’s fraud

Resources:

Business Insider