Corporate Zombies Stagger Through Manhattan At Levels Not Seen Since 2010

If someone drops a comparison to the Great Depression or the Great Financial Crisis, that’s your cue to cancel brunch plans, sell off your stocks, and start Googling “how to hide gold bars from the IRS.” So, consider this your warning: U.S. corporate bankruptcies just hit their highest level since 2010. (Insert Jaws theme here.)

At least 686 U.S. companies filed for bankruptcy in 2024, an 8% increase from 2023 and the highest count since the 828 filings back in 2010. You know, back when "Avatar" ruled the box office and everyone was still figuring out what Bitcoin was. These aren’t just your mom-and-pop corner shops on Gilmore Girls, either. Thirty of last year’s filers had liabilities of at least $1 billion. That’s a "billion," as in, "Bill, you’re not getting paid back."

Even scarier? These numbers don’t even include the companies trying to avoid bankruptcy through “liability management exercises” (read: a hope and a prayer). According to Fitch Ratings, these out-of-court maneuvers outnumber actual bankruptcies two to one. And many of these companies still end up going belly-up after playing debt musical chairs for too long.

The demise of Party City is a prime example of 2024’s corporate carnage. After a brief stint in Chapter 11 in 2023, the party-supply chain couldn’t handle inflation’s one-two punch on costs and consumer spending (or the fact that Amazon sells 100-count balloon packs for the price of one Party City special). They folded for the second time, shutting down all 700 stores. Somewhere out there, a clown is crying over an uninflated balloon. Of course, it’s not just balloons popping. Consumer companies like Tupperware, Red Lobster, and Avon also joined the bankruptcy parade. Turns out, people are saying "no thanks" to overpriced storage containers and cheddar biscuits.

Now let’s transition to zombies… not the kind on AMC, but the 2,000 debt-laden U.S. companies that are barely making interest payments. These corporate undead are staggering toward a financial reckoning, with hundreds of billions in loans coming due. According to Valens Securities’ Robert Spivey, “They’re going to get crushed.” And if that doesn’t keep you up at night, Miami investor Mark Spitznagel adds, “The clock is ticking.” Thanks for the encouraging words, Mark.

While it’s tempting to blame inflation and high interest rates for everything, ironically: the Federal Reserve is starting to cut rates. But that’s like offering someone a dirty rag after they’ve already lost a limb. The damage is done, and the fallout from these bankruptcies will ripple through the economy for years. Private equity funds aren’t helping much either. New data shows that they returned just 11.2% of their asset value to investors in 2023… the lowest since 2009. As Sunaina Sinha Haldea of Raymond James said it best, “The cash flow math at the investor level is broken.”

Now, do I think 2025 will see another Lehman Brothers collapse that evaporates everyone’s 401(k)s like steam from a boiling pot? Probably not. I’m not here ghostwriting for Jim Rickards or Robert Kiyosaki. But I also wouldn’t be doing my job if I only hyped meme stocks or AI companies mooning off Reddit posts. Keep an eye on the numbers… and maybe on that YouTube tutorial. You never know.

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Stock.News has positions in Amazon.