NEW YORK, May 10, 2023 (GLOBE NEWSWIRE) -- In the newest Polsinelli-TrBK Distress Indices Report, levels of distress show an increase through the first quarter of 2023. Chapter 11 and Real Estate show measurable increases in the last quarter, but Health Care, while still high, remains steady with no major surge this quarter.
The first quarter of 2023 proved to have the anticipated increase in Chapter 11 filings as numbers continue to tick up. Even with the increase in Chapter 11 filings, industry experts are not sure it’s a trend just yet, with inflationary pressure and high interest rates still playing a role in increased filings. Despite the increase, the filing numbers remain approximately the same as Q3 2022. Numbers remain significantly lower from COVID highs of 2020, which had filings at twice the rate we see now. However, Chapter 11 trends remain difficult to predict and it appears to be increasing slowly but gradually quarter by quarter.
“There is a lot of press coverage about how bankruptcy filings are ticking up,” said Polsinelli shareholder Jeremy Johnson, a bankruptcy and restructuring attorney and co-author of the report. “However, the data isn’t quite there yet. Even with the increase this quarter in Chapter 11 filings, we aren’t certain that this is a trend just yet and we have not yet reached the same number of filings from Q3 2022 and remain well below the pandemic filings in 2020.”
In the report, released today by Am Law 100 firm Polsinelli, Real Estate continues to experience increased distress as we are experiencing the highest filings in two years. It appears Real Estate distress is finally starting to hit and may be on the way to spiking. Experts foresee filing numbers continue to increase, as we haven’t seen a significant reset in commercial real estate markets and increased interest rates will continue to put pressure on the market.
Although general distress levels are up, Health Care still appears decoupled from the general economy and holds steady overall. There were seven behavioral health filings during the first quarter, showing potential for significant distress in that area.
The Polsinelli-TrBK Distress Indices are the backbone of a quarterly research report series that uses Chapter 11 filing data – bankruptcies with more than $1 million in assets – as a proxy for measuring financial distress in the overall U.S. economy and breakdowns of distress specifically in the real estate and health care services sectors. It is the only current measurement that tracks both Main Street and Wall Street statistics.
Other significant updates in the report include:
- The Chapter 11 Distress Research Index was 40.24 for the first quarter of 2023. The Chapter 11 Index increased nearly six points since the last quarter. Compared with the same period one year ago, the Index has increased over 10 points and compared with the benchmark period of the fourth quarter of 2010, it is down nearly 60 points.
- The Real Estate Distress Research Index was 23.09 for the first quarter of 2023. The Real Estate Index increased over two points since the last quarter. Compared with the same period one year ago, the Index is over three points higher and compared with the benchmark period of the fourth quarter of 2010, it is down nearly 77 points.
- The Health Care Services Distress Research Index was 118.33 for the first quarter of 2023. The Health Care Index decreased nearly seven points since the last quarter. Compared with the same period one year ago, the Index has decreased over 103 points and compared with the benchmark period of the fourth quarter of 2010, it is up over 18 points.
The Polsinelli-TrBK Distress Indices track the increase or decrease in all Chapter 11 filings with more than $1 million in assets since the fourth quarter of 2010. Unlike the public markets, the Polsinelli-TrBK Distress Indices include both public and private companies, creating a broader economic view and one that may show developing trends on Main Street before they appear on Wall Street.
To access the full report, graphs and all past analyses, visit www.distressindex.com.
About Polsinelli
Polsinelli is an Am Law 100 firm with more than 1,000 attorneys in 23 offices nationwide. Recognized as one of the top firms for excellent client service and client relationships, Polsinelli is committed on meeting our clients’ expectations of what a law firm should be. Our attorneys provide value through practical legal counsel infused with business insight with a focus on health care, real estate, finance, technology, private equity, and corporate transactions. Polsinelli LLP in California, Polsinelli PC (Inc) in Florida.
