By US bankruptcy filings rose 18% in 2023 due to higher interest rates, tougher lending standards, and the continued end of pandemic-era support measures, according to data from bankruptcy data provider Epiq AACER.
The report said commercial Chapter 11 business reorganisation filings increased by 72% in 2023, while consumer filings rose by 18%.
Bankruptcy case counts are expected to continue rising in 2024, driven by the end of pandemic stimulus, higher interest rates, and rising delinquency rates.
“As anticipated, we saw new filings in 2023 increase momentum over 2022 with a significant number of commercial filers leading the expected increase and normalization back to pre-pandemic bankruptcy volumes,” said Michael Hunter, vice president of Epiq AACER. “We expect the increase in number of consumer and commercial filers seeking bankruptcy protection to continue in 2024 given the runoff of pandemic stimulus, increased cost of funds, higher interest rates, rising delinquency rates, and near historic levels of household debt.”
Overall consumer filing totals for calendar year 2023 were 419,559, representing an 18 percent increase from the 356,911 consumer filings the previous year.
“Though still below pre-pandemic figures, bankruptcies in all filing categories climbed last year amid the evaporation of pandemic emergency responses, increased interest rates, and tougher lending standards,” said ABI Executive Director Amy Quackenboss. “As interest rates remain elevated, increasing geopolitical tensions weigh on global supply chains and debt loads continue to grow, struggling businesses and families can turn to the proven process of bankruptcy for a financial fresh start.”
Total bankruptcy filings were 34,447 in December 2023, a 16 percent increase from the December 2022 total of 29,654. The consumer bankruptcy filing total of 32,390 also represented a 16 percent increase from the 27,917 consumer filings in December 2022. Overall commercial filings increased 18 percent in December 2023, as the 2,057 filings were up from the 1,737 commercial filings registered in December 2022.
Srinivasan’s three-year term is scheduled to end on 22 September, when he will complete 14 years as the bank’s MD and CEO, during which he’s reputed to have transformed the bank’s operations.
RBI has asked Federal Bank to recommend the names of at least two executives for appointment to the top position, the bank said in a stock exchange notification on Friday.
“… the bank is advised to submit a fresh proposal containing a panel of at least 2 fresh names, in order of preference, for appointment as MD & CEO of the bank having regard to the likely tenure of the candidate and longer term requirements of the bank,” the regulator said in a letter dated 4 January, which was attached with the bank’s notification.
Federal Bank said it had written to RBI 6 October seeking a one-year extension for Srinivasan.
The regulator, under its corporate governance guidelines issued in April 2021, has capped the tenure of incumbent bank managing directors and chief executives at 15 years.
“In our view this is not a negative development. The hangover of the change in management will be behind us as the board will now be forced to search for a replacement,” said Asutosh Mishra, head of institutional equities research at Ashika Stock broking.
“Srinivasan has done a good job in transforming this bank and the board will have to find a suitable candidate to ensure continuation of the performance,” Mishra said.
Srinivasan is among a few bankers who chose to move to smaller Indian banks after long, successful stints with foreign banks. Under his tenure, Federal Bank has changed its image of an old-generation private lender to a digital-friendly private bank with national focus.
The bank’s total business touched ₹4.25 lakh crore at the end of September, and its market cap hit ₹37,608 crore at the end of Friday’s trade. The shares ended the day nearly unchanged on NSE at ₹154.40 apiece.
In November, NDTV Profit had reported that Federal Bank had begun succession planning and was considering elevating executive director Shalini Warrier to the post of deputy managing director.
Last year, RBI allowed a three-year extension for City Union Bank MD and CEO N Kamakodi till May 2026, which coincides with the end of his full 15-year term.
Kotak Mahindra Bank’s MD and CEO Uday Kotak stepped down last year four months before the end of his term.
RBI, which was given a choice between an internal candidate and an external candidate for the top post at Kotak Mahindra Bank, opted not for the frontrunner KVS Manian but for Ashok Vaswani, who is perceived to be a global banker.
The RP, appointed to conduct the insolvency resolution process, also reported substantial progress in talks with Go First’s lessors, with the number of agreeing lessors increasing from two to five.
Due to a paucity of time, the court deferred the hearing to 11 and 12 January.
The RP had on 20 December informed the court about discussions regarding engaging a third-party agency for aircraft maintenance. The collation of aircraft-related documents is in progress, and the agency is expected to cover maintenance for all 54 aircraft leased with Go First.
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