California Bankruptcy Cases Likely to Increase as Airlines now Seek Protection

Bankruptcy Cases in California Expected to increase Even as Businesses Reopen

The coronavirus pandemic has now claimed among its economic victims one of the largest airlines in Latin and Central America. Avianca (AVH) is one of the longest continually running airlines in the US. The company becomes the latest to succumb to the loss of business due to the pandemic after the government instituted stringent travel measures to control its spread.

California was one of the first states to go into lockdown following the spread of the COVID-19 pandemic in the country. Having been in virtual lockdown for the past ten weeks, the government is finally opening up its businesses albeit with a raft of precautions.

The loss of business due to stringent government regulations restricting traveling has affected airlines the most as interstate travel and international flights are the backbone of their economies.

California Pacific Airlines earlier filed for Chapter 11 California bankruptcy protection in a bid to reorganize its debts with creditors after the business went down. It remains uncertain how many more will follow the same route due to the impacts of the COVID-19 pandemic.

Even as businesses reopen, the government announced that the economy would only reopen to 70% capacity in the following months, leaving the rest in the dark. Even so, the economy is not expected to recover immediately. Thus companies filing for California bankruptcy protection are expected to rise in the following months.

Economic experts have already predicted a rapid increase in bankruptcy cases over the next 18 months. States like California, which have been in a lockdown for the longest time, remain the most affected by the drop in business while the coronavirus pandemic spreads even further.

The state continues to battle the pandemic on one side while struggling to keep its economy running on the other. Employment levels rose following the lockdown with millions of its citizens filing for unemployment benefits from the state to alleviate their financial situation. Governor Newson, however, urged the residents to remain optimistic in the face of the pandemic and resume business operation while observing prevention measures to limit its spread.