As COVID-19 exacerbates the rise in commercial bankruptcies that predate the pandemic, Derek Meek lent insight on the state of local bankruptcy filings in the August 7, 2020, Birmingham Business Journal.

While consumer bankruptcies are down compared to last year thanks to the government stimulus, commercial filings continue to rise, especially in Birmingham’s energy sector and restaurant and food services industries. “Unless and until we have major relief from COVID, I can only think that corporate filings will continue at the pace we’re currently at, or increase,” Meek said. “Based on stimulus programs and other legislation designed for relief for the individual, if those go away before there’s a vaccine, I think individual bankruptcies will have to reverse the trend we’re seeing of lower numbers. You can’t reconcile unemployment numbers against the bankruptcy numbers.”

Although the pandemic isn’t the only cause of many bankruptcies, the pandemic can be the biggest factor for current and future hospitality-related filings. However, Chapter 11 bankruptcies are all about reorganization, which is difficult to do without revenue, causing many hospitality businesses to hold off on filing.

When filings across all sectors pick up even more, they will have a domino effect on Birmingham’s economy and beyond that will affect customers, competitors, employees and even municipalities that generate less tax revenue from struggling businesses.

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