Total bankruptcy filings rose 16% during the 12-month period ending March 31, 2024, compared to the previous year. Business bankruptcies specifically increased by 40.4%, from 14,467 in March 2023 to 20,316 in March 2024.

Chapter 11 filings registered a 43% increase in the first quarter of 2024 compared to the same period in 2023, with 1,894 filings.

Small business filings under Subchapter V elections for small businesses increased 30% to 606 filings in Q1 2024 from 465 in Q1 2023.

The longer-term trend is that March 2024 marked the 20th consecutive month of year-over-year increases in commercial bankruptcy filings.

Factors contributing to the increase are higher interest rates, reduced consumer spending, increased housing costs, and a drawdown of excess savings are cited as reasons for the upward trend.

Future outlook it is anticipate this upward trend inbusiness bankruptcies to continue through 2024, particularly as a substantial amount of corporate debt matures, making refinancing or debt repayment challenging for many companies.

This data clearly indicates a significant and consistent increase in business bankruptcies across various categories and time periods.

Bankruptcy Catalyst

A significant number of EIDL borrowers are struggling to make payments. One source mention hearing figures of around 50% of EIDL loansbeing either in default, charged off, or in deferment and this is probably low estimate.

Many businesses that took EIDL loans are having difficulty repaying them because they need to sustain businesses through periods of little or no revenue during COVID-19, rather than for growth. Some businesses have not fully recovered to pre-pandemic levels, making it challenging to repay the additional debt. Businesses that were marginally profitable before the pandemic now have additional debt without increased revenue to support repayment.

August 16, 2024

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