Chap. 11 Bankruptcies Spike 63% From Year Ago

This is a sign that the economy has arrived at the end of the “credit cycle.” The Fed is trying to push up interest rates and tighten financial conditions. Weak companies are starting to have a harder time refinancing their debts. And those that succeed face higher borrowing costs. Some sectors are getting hit harder than others, such as brick-and-mortar retail, which had a terrible March. But this is now spreading in other sectors, such as specialized subprime auto lenders.

Subprime auto-loan delinquencies have surged to the highest rate since October 1996. Scores of smaller specialized lenders have piled into this field after the Financial Crisis, some of them backed by private equity firms. Three of them have now collapsed into bankruptcy or were shut down. Allegations of fraud and misrepresentations are swirling through the bankruptcy filings. Read…  Subprime Carmageddon: Specialized Lenders Begin to Collapse

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