Company insolvencies rocket — with more to come

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Other firms are left unpaid and new suppliers may be more expensive

Governments around the world are scrambling to save companies battered by coronavirus lockdowns but the world is nevertheless facing a surge in bankruptcies by a third, a study conducted by a trade insurance firm said on Monday.

The firm, which provides insurance for trade deals, said this would be a record for its global insolvency index — and that about half of countries will be setting new highs since the 2009 financial crisis. In the US, “the rapid spread of the virus is amplifying the trough in activity and generating a liquidity crisis for a larger set of companies”, said the report. “We do not expect the U-shaped recovery in the US to be sufficient to offset all the legacies of the crisis on financial metrics, nor to prevent the rise in insolvencies from continuing into 2021,” it said.

 

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