Macroeconomic Factors

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According to a new report from Cornerstone Research, the number of large corporate bankruptcies “surged” in the first half of 2023 compared to the number of filings in the most recent years. The report, which is entitled “Trends in Large Corporate Bankruptcies and Financial Distress: Midyear 2023 Update” reports that the number of large corporate bankruptcy filings in the first half of this year already exceeds the total number of filings for the full year 2022. Cornerstone Research’s September 26, 2023, press release can be found here. The report itself can be found here.…

Continue Reading Large Company Bankruptcy Filings “Surged” in Year’s First Half

In my 2022 year-end wrap up of D&O insurance developments, I identified macroeconomic factors as among the sources of D&O claims during the past year including, among other things, interest rate increases, economic inflation, labor supply and supply chain disruption, and the Ukraine War. In various posts this year, I have noted that these factors continue to affect companies and to contribute to the number of securities class action lawsuit filings. In the latest example of the way in which these macroeconomic factors can translate into securities litigation, the drug and healthcare company Baxter International was sued last week due to the decline in the company’s share price after the company’s announcement that continuing supply chain woes were setting back its operations and financial results more significantly than the company had anticipated. The new lawsuit shows that macroeconomic factors such as supply chain constraints are continuing to contribute to securities lawsuit filings. A copy of the July 12, 2023, complaint against Baxter can be found here.…

Continue Reading Baxter Hit with Supply Chain-Related Securities Class Action Lawsuit

The number of securities class action lawsuit filings in the year’s first half was up slightly compared to the number of filings in the first half of 2022, though roughly in line with the long-term average number of half-year securities suit filings. As discussed below, several factors contributed to the number of filings in the first six months of 2023, including the number of crypto and digital currency-related filings and the number of filings related to macroeconomic factors (such as interest rates, labor supply, and inflation). Concerns that drove securities suit filings in recent periods, including COVID-related suits and SPAC-related suits, were less of a factor in the year’s first half.…

Continue Reading Securities Suit Filings Up Slightly in Year’s First Half

Sarah Abrams

A host of economic factors — including most significantly the Fed’s interest rate increases (as part of The Fed’s overall money tightening policy sometimes referred to as Quantitative Tightening (QT)) – are putting pressure on companies, and the pressure is translating into increasing bankruptcy filings. In the following guest post, Sarah Abrams, Head of Professional Liability Claims at Bowhead Specialty, takes a look at these developments and considers the D&O insurance implications. I would like to thank Sarah for allowing me to publish her article as a guest post on my site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Sarah’s article.…

Continue Reading Guest Post: Is QT making D&O Policies a Liquid Asset? 

              

In the current economic environment, companies are wrestling with a host of macroeconomic issues, including rising interest rates, economic inflation, continuing labor shortages, and the war in Ukraine. In addition, another issue companies are facing in the wake of the pandemic is supply chain disruption, which continues to challenge some companies. In the latest sign…

Even though the COVID-19 pandemic is now into its fourth year, plaintiffs’ lawyers continue to file pandemic-related securities class action lawsuits, increasingly in conjunction with allegations involving other macroeconomic factors, such as rising interest rates, economic inflation, supply chain disruption, and labor supply shortages. In the latest example of litigation of this type, last week plaintiffs’ lawyers filed a securities class action lawsuit against tool maker Stanley Black & Decker, alleging that the company misled investors that the pandemic-fueled surge in demand for the company’s product would continue even as conditions changed. A copy of the March 24, 2023, complaint against the company can be found here.…

Continue Reading Stanley Black & Decker Hit with COVID-Related Securities Suit

At the beginning of the year, when I surveyed the D&O claims landscape and predicted the factors that I thought might drive D&O claims volume in 2023, one set of factors I projected might make significant contributions to the number of claims to be filed during the year were the number of macroeconomic challenges – for example, rising interest rates, economic inflation, labor supply disruption, and the war in Ukraine. The recent failure of Silicon Valley Bank and the ensuing securities litigation provides one illustration of how these macro factors can translate into D&O claims.

Now, in the latest illustration of these forces at work, investors have filed a securities lawsuit against the organic foods company United Natural Foods, following the company’s recent disappointing earnings announcement in which the company disclosed a decline in profitability, despite increasing sales, due to inflationary pressures. A copy of the March 20, 2023, lawsuit against United Natural Foods can be found here.…

Continue Reading Inflation Hits Organic Food Company’s Quarterly Results, Draws Securities Suit

In my year-end wrap up of the top D&O stories of 2022, I noted the possibilities that various macroeconomic factors could contribute to securities class action lawsuit filings in the months ahead. One of the specific factors I identified was economic inflation. In subsequent conversations, I have been asked how an economy-wide phenomenon such as inflation could lead to a securities suit against any one individual company. A lawsuit filed earlier this week provides an illustration of how the inflationary impacts can translate into securities litigation. A copy of the March 1, 2023 complaint in the lawsuit, filed against coffee retailer and franchisor Dutch Bros Inc., can be found here.…

Continue Reading Inflation Undercuts Company’s Financial Results, Leads to Securities Suit

In my recent round-up of the top D&O stories of 2022, one of the stories I identified was the contribution of macroeconomic factors to the filings of securities class action lawsuits during the year. Among the macroeconomic factors I identified, beyond interest rate increases, economic inflation, and supply chain disruption, was the disruption to the labor force following, or perhaps resulting from, the pandemic. A recently filed securities suit shows how these kinds of factors can translate into securities litigation.…

Continue Reading Labor Supply Disruption Contributes to Recently Filed Securities Suit