Bankruptcy cases rise by 40% in the city.

The past seven months have been extremely challenging for New York City, with prolonged lockdowns and business closures draining the finances of business owners, ultimately leading to permanent shutdowns. A recent report by Bloomberg reveals that approximately 6,000 businesses in NYC have permanently closed, with bankruptcy filings spiking by over 40%. The situation is expected to worsen as the colder months approach.

During the weekend, over 1,000 new cases of COVID-19 were reported in the city, particularly impacting the Jewish communities in Brooklyn and Queens observing Yom Kippur. The already tense atmosphere in the city has intensified, causing many residents to be reluctant to engage in shopping, dining, or traveling in close proximity. While outdoor businesses like larger retail areas and restaurants with outdoor seating have been able to operate with some success due to open spaces, they are likely to face challenges once the snowfall begins.

According to lawyer Al Togut, “We can expect a rise in bankruptcies in New York City as the cold weather sets in.”

With federal aid diminishing, pending loan repayments, and landlords demanding rent, numerous small and large business owners will struggle to keep their operations running. This will lead to a decline in the city’s economic stability, given that a loss of businesses translates to an overall economic setback.

For some small business owners, the financial situation is so dire that they cannot even afford the costs associated with filing for bankruptcy, which can amount to $25,000. Consequently, these distressed business owners are left with no choice but to close down their establishments permanently.

Bankruptcy attorney Leslie Berkoff commented, “Why file for bankruptcy when no one is actively pursuing debts right now? Many of your suppliers may not survive this crisis either.”

Estimates from the Partnership for New York City suggest that by the time the pandemic subsides, the city may lose up to a third of its 230,000 registered businesses.