Review of U.S. Business Bankruptcies During the COVID-19 Pandemic Review of U.S. Business Bankruptcies During the COVID-19 Pandemic

By Juli Collins-Thompson, Brendan Collins, and John Maher

In this note, we review trends in U.S. business bankruptcy filings between 2019 and the third quarter of 2021, with a focus on the COVID-19 pandemic period. We examine macro trends in business bankruptcies as well as conduct an in-depth review of industries hardest hit by the pandemic, including hotels, retail and restaurants. We find that, thus far, the anticipated surge in bankruptcies has largely not materialized, including in the aforementioned industries. Official sector actions, including those by the Federal Reserve, played a key role in offsetting the negative impact on businesses of stay-at-home orders and other policies enacted to reduce the spread of COVID-19. We also examine the financial characteristics of bankrupt companies in the hotel, retail and restaurant sectors and find that bankruptcies were generally skewed towards smaller companies, which tended to have higher leverage.