U.S. companies have filed for bankruptcy at the fastest pace since 2013 as the COVID-19 fallout continues to ripple through the country, The Financial Times reported on Tuesday.
Citing data from legal services group Epiq, the report said a total of 3,427 companies have filed for Chapter 11 bankruptcy in the United States this year, close to the 3,491 filings during the first half of 2008.
"The data stand in contrast to an improving economic backdrop following hefty central bank support across the globe and economies starting to reopen," the report said, noting the pain already inflicted by the global pandemic is too much for some companies to recover from.
"It is very difficult for these companies to operate in a near zero-revenue environment," Sudeep Kesh, head of credit market research at SP Global Ratings, was quoted as saying. "They are facing a lot of pressure."
During the last financial crisis, there were 8,614 company bankruptcies in the United States in 2008, and the number rose to 12,644 in 2009, according to the report.
The report came as the Paycheck Protection Program (PPP), a U.S. government aid program intended to help small businesses retain their employees during the COVID-19 crisis, was set to close Tuesday with more than 130 billion U.S. dollars left unused.
U.S. Treasury Secretary Steven Mnuchin said on Tuesday that the Trump administration supports legislation to repurpose the remaining funds in the PPP.
"I've already had conversations with the SBA (Small Business Administration) committee in the Senate about repurpose that 135 billion dollars, and think that should be done, and look forward to working with both the House and the Senate so that we can pass legislation by the end of July," Mnuchin said at a hearing before the House Financial Services Committee.
The aim should be "extending it to businesses that are most hard hit, that had a requirement that their revenues have dropped significantly, things like restaurants and hotels and others where it is critical to get people back to work," Mnuchin said.
The PPP was conceived as a lifeline to small businesses shuttered by the coronavirus pandemic, but it also faced criticism as some big publicly traded companies secured millions of dollars of PPP loans.
Amid mounting pressure from lawmakers and the public, the U.S. Treasury Department and the SBA said earlier this month that they would disclose information about businesses that take PPP loans of 150,000 dollars or more.
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