Melissa and I “sat down” in 2021 to discuss “Bankruptcy in a post-COVID world“. Like many of us in early and mid ’21 we were waiting for the end of the pandemic and the eventual economic fallout. That had not occurred when Melissa and I spoke and as I write this piece in December ’21 there is no end to the pandemic insight. The news this very morning discussed the newest variant. I reflected on my conversation with Melissa and remembered a comment she made that until markets reflect a downward trend and capital freezes, we can expect a hold on bankruptcies. She made absolute sense! No one is complaining, litigating, fighting, etc. with cash flow and liquidity as open as it is. Why? Because the standard economic/financial pressures have been mitigated and, in some instances, removed for businesses.
Until businesses and individual owners ‘feel’ liquidity constraints we should not expect an increase in bankruptcy filings. Makes sense to me, but I pondered another thought. What is excess liquidity coupled with irresponsibility leading to? That is the question we face in the immediate future as professionals working in some form of economic or financial disputes.
Josh Shilts, CPA/ABV/CFF/CGMA, CFE
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