Bankruptcy Cuts Soar, Highest Since 2009
Job cuts announced due to bankruptcy have hit the highest level since 2009, according to a new analysis of monthly job cut announcements from global outplacement and executive and business coaching firm Challenger, Gray & Christmas, Inc.
Through July, companies have announced 42,937 job cuts due to bankruptcy. That is 40% higher than the 30,673 job cuts announced for this reason through July 2018 and 19% higher than the 36,016 bankruptcy cuts announced through all of 2018. It is the highest seven-month total since 2009 when 50,258 cuts due to bankruptcy were announced. In fact, it is higher than the annual totals for bankruptcy cuts every year since 2009, when 50,911 were announced for the entire year.
This week, Barney's New York Inc. announced it was closing most of its stores as it prepares to file bankruptcy protection. Meanwhile, Perkins and Marie Callender's LLC filed for bankruptcy protection and will close 19 Marie Callender's and 10 Perkins locations. One location in Janesville, WI cost between 50 and 80 jobs, according the Janesville Economic Development Director Gale Price, as reported by News 3 Now, CBS Madison. Last month, coal mining company Blackjewel filed for bankruptcy, shut down operations, and missed payroll payments to an estimated 1,100 employees.
Companies attributed bankruptcy to 11.6% of all job cuts announced through July this year. That's compared to 11.3% of all cuts in the same period in 2018. Since 2007, bankruptcy has accounted for less than 6.32% of all job cuts each year through July prior to 2018 and less than 6% when taking into account data for the full year.
"We have seen a number of retailers filing for bankruptcy, closing locations, and cutting workers, and indeed, the majority of bankruptcy cuts occurred in that industry. In recent months, however, we've seen bankruptcy filings that led to cuts in manufacturing, transportation, and automotive," said Andrew Challenger, Vice President of Challenger, Gray & Christmas, Inc.