The official bankruptcy filing may take time, but many will cease operations immediately once cash reserves are exhausted. If liabilities aren’t significant, there might not even be a bankruptcy filing; they’ll just never hire workers back and the owners will file their last tax returns for the business next year.
The effects will take time to be felt; with the US stimulus bill (“CARES Act”) providing 10 months of unemployment, workers will be cushioned for now, but might not be able to find jobs when that relief expires.
You don't have to declare bankruptcy to shut down a small business - even with huge debt. You just dissolve the business entity and the debt goes down with the ship (unless you have a contract that says otherwise).
Most small businesses would be required to personally guarantee the debt (unless they were able to show a history of revenue to an amiable lender); owners will either cover out of their pocket to protect their credit reports, and only failing that, declare BK. Of course, walk away from the debt if you’re not personally guaranteeing it.
Leases will be broken and debt will be defaulted on at scale; it’s going to take years for everyone to fight over the scraps in court.
The effects will take time to be felt; with the US stimulus bill (“CARES Act”) providing 10 months of unemployment, workers will be cushioned for now, but might not be able to find jobs when that relief expires.