The numbers only account for lead case bankruptcy filings, which exclude the filings of big corporate subsidiaries and may differ from bankruptcy statistics elsewhere.
In total, 157 companies with liabilities of more than US$50m have filed for Chapter 11 bankruptcy this year and many believe a lot more will follow.
"We are in the first innings of this bankruptcy cycle. It will spread far across industries as we get deeper into the crisis. It's going to be a bumpy ride," said Ben Schlafman, chief operating officer at New Generation Research.
The spike in bankruptcies comes despite trillions of dollars in government aid to mitigate the fallout of the coronavirus pandemic on businesses, highlighting the catastrophic and lasting impact Covid-19 is having on the US economy.
"Ending the US$600 per week federal unemployment benefits will push tens of millions of Americans into, or uncomfortably close to, poverty. They won't have the money to buy billions of dollars worth of goods and services. As a result, the entire economy will suffer. Small businesses will continue to suffer the most because they're already precarious," said Robert Reich, who was US labour secretary under Bill Clinton.
Multimillion dollar corporate defaults have been led by oil and gas companies this year as low crude prices have crippled many businesses. There have been 33 filings to date, including Chesapeake, Whiting Petroleum and Diamond Offshore Drilling. There were only 14 last year.
Retail businesses with assets of more than US$50m have also been severely affected as 24 have filed for bankruptcy, a three-fold jump on 2019 figures.
They have been among the hardest hit by the government-mandated lockdowns, which prevented stores from opening and drove consumers to online retailers such as Amazon.
Burdened by debts, some of which were built up under private equity ownership, several prominent retailers have been forced to file for Chapter 11.
Neiman Marcus, the luxury department store chain that struggled for years with a heavy debt burden from its 2005 leveraged buyout by TPG and Warburg Pincus, was forced to file for bankruptcy in May with liabilities of US$6.7b.
JCPenney, another household name that was saddled with billions of dollars in debt, also filed for Chapter 11 bankruptcy in May. Brooks Brothers, the venerable suit retailer that once counted Abraham Lincoln and John F Kennedy among its clients, did the same in July.
"The Covid-19 pandemic is reshaping consumer buying habits. Therefore, we will continue to see large retail, energy, and transportation businesses taking advantage of the tools provided by a formal bankruptcy to restructure to be more profitable and competitive in the long term," said Deirdre O'Connor, managing director of corporate restructuring at legal services group Epiq.
The latest data on rising bankruptcies come as the US economy shrank at an annualised rate of 32.9 per cent in the second quarter, the most in postwar history, according to a preliminary estimate from the Bureau of Economic Analysis.
Several businesses tried to reopen in late May and June, but a recent flare-up in coronavirus cases and deaths in several US states choked the recovery, forcing many business owners to close again.
"It pains me to say this, but bankruptcy is a growth industry in America," New Generation Research's Schlafman added.
Written by: Patrick Mathurin, Ortenca Aliaj and James Fontanella-Khan
