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Monday, August 28, 2006

Corporate Bankruptcies to Rise

By Yaser Anwar, CSC of Equity Investment Ideas

An annual report published by PricewaterhouseCoopers’ Corporate Advisory and Restructuring group says corporate bankruptcies are on the rise for the first time since 2001.

BusinessWeek says the report forecasts that 88 publicly-traded companies will file for bankruptcy this year, up from 80 filings in 2005. The report also predicts that roughly 100 public companies will file for bankruptcy next year.

A majority of the bankruptcies will be in the retail and consumer products sectors. They’ll also be in the manufacturing industry, including automotive, plastics, paper, computer, and electronic product sectors.

Due to a slowing economy, rising interest rates and energy prices, and waning consumer spending as reasons for the increase in bankruptcies.

However, investors should note that even though bankruptcies are trending up, they’re still low by historically. In 2001, a record 257 public companies filed for bankruptcy. The average number of bankruptcies between 1998 and 2003 was 170.

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