BANKRUPTCY FILINGS SURGE: ECONOMIC PRESSURES DRIVE RECORD NUMBERS IN FIRST HALF OF 2024
Category: Legal News
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Based on figures from the Insolvency and Bankruptcy Board of India, the number of new corporate bankruptcy cases filed within the period has reached 346, the most significant in a 13-year period. This increased the rate of business failures from the previous months of 2024 with consumer discretionary as the most hit sector which contributed to 55 of the total bankruptcies.
The increased cases of bankruptcy filings are not only confined to the corporate world but has affected everybody out there. The data gathered from IBBI also shows that there has been, on an average, 16.8 percent. The total of new filings, business and non-business, was an 8 percent increase for the twelve month through December 2023. , while business filings increased at a steeper rate, by 40.4 percent, business filings dropped by 4 percent, thus showing the results of the decline in the Canadian economy, whereas non-business filings rose by 16 percent.
This observation is further supported by Epiq Bankruptcy Data where there was a huge 118 percent increase in the number of commercial chapter 11 filings in February 2024 where 822 filed down from 377 in the same month the previous year. According to the data, there was 39 014 bankruptcy filing reported in February of 2024, it was 22 percent higher than in the similar period of the previous year.
There are various root causes of these factors that can be linked to the current rising trend in the bankruptcy filings. Some of the steps that the Reserve Bank of India has taken to reign in inflation include raising interest rates, a move that has impacted on borrowers especially the corporate and individuals since it has become expensive to borrow. Also, the disruptions of supply chains around the world have contributed the loss of business products, high expenses, and scarcity of basic necessities which in turn pressurized businessmen and consumers financially a lot.
Future predictions indicate that more people will be filing for bankruptcy in India because of several factors such as ongoing economic fluctuations, high-debt levels, and possible future economic crises. Unless there are positive changes in the overall economic environment, the increase in bankruptcy rates will persist, and therefore, policymakers and other related stakeholders must consider taking appropriate action for remedying the main causes and helping struggling persons and entities.
A record number of 71098 bankruptcies in the first half of the calendar year 2024 reflect the essential issues at the core of the Indian economy. This is why it is important for the people of this Country and those who are in a position to address the financial problems and to rebuild the economy to wake up and start writing the story of the economic recoveries in the midst of the above odds.
OLQ is a Pan-India basis law firm connecting legal expertise nationwide.
WRITTEN BY: ABHISHEK SINGH
GUIDED BY: ADVOCATE ANIK
