In my belief, when a company reorganizes its liabilities and assets, renegotiation (in terms of debt) is catapulted. For example, interest rates can plummet, terms of payment may be extended in order to reduce immediate pressure on the struggling company. (1/17)

However, contrary to popular belief, bankruptcy doesn’t necessarily mean immediate catastrophe. Many filers emerge from reorganization with a more profitable business model - resulting in greater prospects ahead! (2/17)

That being said, the most confusing and layered filing practice is probably Chapter 11 bankruptcy. It involves reorganizing an ENTIRE company, basically - reorganizing relationships, affairs, assets, and debts... This even requires attorney participation. (3/17)

Companies must be extremely careful when approaching Chapter 11. It is best done after all else fails. In English, Chapter 11 is really a company’s last resort option before having its grave dug into the corporate graveyard. (4/17)

The corporate graveyard has been acquiring many new members as of today. Coronavirus has caused numerous companies to face bankruptcies at an alarming rate. So far, 45 companies have filed for Chapter 11 bankruptcy, each with assets over $1 billion. (5/17)

With the graph above from Financial Times, that only represents the data of August. In my opinion, aggressive bankruptcy will slowly decrease due to economic catalyzation and stimulus. (6/17)

Here are two examples of United States based companies that have announced significant workforce layoffs (in the last two weeks):
- Disney cut 28,000 jobs from their parks.
- American Airlines plans to cut 20% of its workers - totaling to 19,000 people.
(7/17)

Through those examples, it can be seen that even with trillions of stimulus and the unshuttering of the economy currently, companies are still struggling. Here are some companies that have filed for Chapter 11 bankruptcy in 2020:
- Neiman Marcus
- Chuck E. Cheese
- Aldo
(8/17)

2020 has seen 33 bankruptcy filings, while 2019 only 18. Some of the largest multimillion dollar corporate defaults stem from the gas and oil industry. So my question is - do the rapid increases in bankruptcy filings correlate to the onset of economic recession? (9/17)

Let’s start with the Iranian Revolution of 1979. This revolution resulted in a sudden increase in oil prices, resulting then in an energy crisis. This later on sent the United States into a short recession. (10/17)

Beginning in 1980, Chapter 11 bankruptcies increased from approximately 7,000 to 15,000. This slowly bled through 1987 - well past the end of the energy crisis. (11/17)

Following the continuous, irrationally optimistic growth from technology stocks in the late 90’s, the market burst plunged the economy into a recession that was exacerbated because of 9/11. Chapter 11 filings then increased from approximately 9,000 to 11,500. (12/17)

Starting in 2007, the financial collapse faced a sudden increase in Chapter 11 filings, causing around 5,000 to 10,000 in 2008. In 2009, Chapter 11 filings further increased to 15,000. This recession is a clear example of the foretelling power of bankruptcy filings. (13/17)

The graph below shows the rate of corporate bankruptcies increase dramatically from 2006 to 2007, long before the stock market late in 2008. Some major corporate defaults began as early as February of this year! (14/17)

To conclude, the last three recessions we have faced as a country were foreshadowed by significant increase in Chapter 11 filings. With the evidence of 2008’s timeline, I predict market disruption could be seen as late as the end of 2021 and the beginning of 2022. (15/17)

Of course, I am just speculating and predicting right now. A global pandemic, a potential bank collapse, widespread social unrest, and on top (in my opinion) the most polarizing election in United States history make the current economic environment (16/17)

notably disparate from the economy of the financial crisis. I’d like to end this long, opinionated epiphany with my favorite quote in the entire simulation, “History repeats itself.” (17/17)