In a Tampa Bay Business Journal article published Feb. 22, 2024, Trenam Bankruptcy and Creditors’ Rights practice group co-leader Stephanie Lieb shared her insights on business bankruptcies in Florida reaching a 10-year high.
Last year, Chapter 11 bankruptcies in Florida hit their highest point since 2013, driven by a 51% year-over-year increase in filings in the state’s Southern District. In the Middle District, business bankruptcies returned to pre-pandemic levels, with Chapter 7 cases up 44% and Chapter 11 reorganizations in line with the average volume filed since 2015.
Lieb noted the rising pressure is particularly affecting small businesses, as indicated by an increase in defaults on government-guaranteed Small Business Administration (SBA) loans, with around $532 million in 7(a) loan charge-offs reported in 2023, a 14% increase from 2022.
Businesses with thin profit margins, such as restaurants and freight logistics companies, have been more susceptible to the higher rate environment, Lieb said. “There’s a squeeze there, and the Fed has signaled that they’re not budging in the short term,” she added.
Lieb also noted signs of stress for lenders engaged in floor plan financing—the bread and butter for car, recreational vehicle and boat dealerships. “When things aren’t going well, the first things to go are the luxury items. That’s a bit of an indication for the future,” she said.
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