The biggest bankruptcy of the year is FTX, in more ways than one. The failed cryptocurrency exchange co-founded by Sam Bankman-Fried dominated headlines in distressed debt this year, but it will probably end up having the biggest debt pile when all is said and done, too. Of course, it was far from the only company to seek protection under Chapter 11 of the bankruptcy code in 2022, and a look under the hood says ominous things about which companies are in trouble.
The number of U.S. companies filing for bankruptcy dropped this year, but that’s not expected to last, with the Federal Reserve hiking interest rates several times in 2022 and likely continuing into 2023. Many U.S. companies are on the hook to repay loans in 2023, and may need to refinance, but higher interest rates may make that financially impossible, said Tim Walsh, a partner and global chair of law firm Winston & Strawn’s restructuring and insolvency practice. So how much more debt is piled up out there, waiting for a 2023 bankruptcy?
