Bankruptcy filings are on the rise. As the economic good times of the past few years are seemingly drawing to a close, it’s creating trouble for many publicly traded companies.

Retail companies have been particularly hard hit. Firms such as Bed Bath & Beyond, Party City, and Rite Aid are among those that have already filed for bankruptcy and had their stocks delisted in 2023. And more bankruptcy filings will likely be arriving around year-end if the holiday shopping season fails to turn things around.

With interest rates at high levels and the economic outlook being so uncertain, investors should be cautious. That’s especially true for these three penny stocks at risk of bankruptcy that appear to be on their last legs.

WeWork (WE)

WeWork (NYSE:WE) appears to be the next domino to fall in the commercial real estate market. Prominent business outlets have reported that the company appears likely to file bankruptcy within the next week.

It’s not hard to see why. The company ran up billions of dollars in operating losses as it spent lavishly to achieve growth at almost any cost. But, when the pandemic hit, demand was sharply affected, and WeWork became highly unlikely to be able to recover the costs it had invested in its leases.

Indeed, things went from bad to worse as interest rates soared. This raised the costs of obtaining capital while making WeWork’s existing office leases even less desirable compared to where the office market is in the year 2023. For WeWork to have a viable business, it seems the company will need to discharge its existing overly expensive leases in bankruptcy and reach more favorable terms with its landlords.

WE stock has fallen about 99% over the past year as investors realize equity is likely to be wiped out. There is still some speculation around a potential short squeeze or last-minute buyout. But considering the firm’s dreadful balance sheet and rumored bankruptcy plans, traders should prepare to potentially lose any remaining capital in WE stock.

Aurora Cannabis (ACB)

Aurora Cannabis (NASDAQ:ACB) was once one of Canada’s most promising marijuana companies. So how did it land on this list of penny stocks at risk of bankruptcy?

In short, the company has fallen upon hard times. Canada’s recreational cannabis market ended up being vastly oversupplied as demand failed to live up to expectations. On the other side of the ledger, many cannabis companies spent extravagantly with the idea that windfall profits would be right around the corner. When that didn’t materialize, trouble ensued.

Aurora Cannabis has since slashed expenses. It has taken out 400 million Canadian dollars worth of expenses, with another round of cost-cutting announced this summer. It also shuttered its large Aurora Sky facility in Alberta. Despite the cost savings, Aurora remains unprofitable and some have raised concerns about lofty executive compensation at the company given its poor financial results.

While Aurora Cannabis still has some remaining cash, it also has a hefty chunk of current liabilities. And with the stock hovering around the 50 cent mark, there doesn’t appear to be much investor appetite to fund the company’s further losses. It makes one wonder if Aurora will ultimately follow many other Canadian cannabis companies who have already declared bankruptcy over the past year.

Beyond Meat (BYND)

Beyond Meat (NASDAQ:BYND) was once a high-flying alternative proteins company. It sought to popularize plant-based burgers, sausages, and other such products.

While the company’s stock sizzled for a while, the firm’s products never developed much traction in the marketplace. The firm’s sales growth went into reverse not that long after the firm’s IPO and Beyond Meat struggled to ever generate acceptable profit margins on its products.

A recent analysis from Food Institute suggested that Beyond Meat may end up in bankruptcy. Fellow alternative foods company Tattooed Chef has already started its bankruptcy proceedings, and alternative milks company Oatly (NASDAQ:OTLY) has seen its share price collapse to virtually zero amid massive operating losses. So far, there simply hasn’t been much evidence that customers are willing to pay enough for these niche products to make for a viable business model.

Given that Beyond Meat’s convertible bonds have crashed to just nickels on the dollar, it seems like it is only a matter of time until BYND stock follows that same road toward potential insolvency.

On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.