CFO magazine called upon Partner Victor Sahn for the article, “Will Lower Unemployment Drive Bankruptcies”, addressing the looming threat of increased interest rates as a result of rising employment, and the implications for companies on the verge of bankruptcy.
“Unrealistic, unsustainable low interest rates have been the palliative for many sick companies,” said Mr. Sahn. “However, we are fast approaching the unveiling of higher rates. As employment increases, it puts a lot more pressure on [Fed chair] Janet Yellen to raise rates.”
Though many companies may be at risk of insolvency when interest rates do rise, Mr. Sahn identified two groups who may be particularly in danger: small, boutique mall businesses and real estate firms.
When asked what companies like these can do to prepare for the coming higher interest rate, Mr. Sahn commented, “they have to finally face their problems, whether it’s cutting costs or frankly selling to someone who can operate the business more efficiently and profitably.”