In a report issued last month, trade credit insurer Euler Hermes predicted that corporate insolvencies in the United States will increase by 10% in 2007. You can find details about this estimate, as well as a very interesting global economic analysis, in the full Euler Hermes global macroeconomic and insolvency outlook report.
This updated report reflects a slightly larger predicted increase in corporate bankruptcy levels from those in its report from July 2006, which I reported on in a prior post. Interestingly, while the July report predicted that corporate insolvencies would fall by 5% in the United States during 2006, this new report states that business bankruptcy filings for 2006 will end up falling by 20% over 2005 levels.
The report anticipates a "soft landing" for the U.S. economy in 2007, despite decelerating consumer spending, a sharp downturn in construction, an unemployment rate predicted to rise to 5.8%, and a growing current account deficit. The combination of these cyclical factors and the lower level of insolvencies in 2006, however, are likely to drive Chapter 11 bankruptcy levels higher in 2007.
Bob Eisenbach
Listed in The Best Lawyers in America® for Bankruptcy and Creditor-Debtor Rights Law, and recognized as one of Northern California’s Super Lawyers®, Bob focuses his practice on restructuring, bankruptcy, distressed M&A, and related litigation. He is regularly involved in cases throughout the country, including California, Delaware, and New York.