The state of business bankruptcies in the first half of 2024 has been marked by a significant increase across all chapters, particularly in Chapter 11 filings.

Commercial Chapter 11 Filings

Commercial Chapter 11 filings (including subchapter V) registered the largest increase in the first quarter of 2024, with 1,894 filings, up 43% from 1,325 filings during the same period in 2023. This surge indicates a growing number of businesses facing insolvency and seeking reorganization or restructuring.

Overall Commercial Bankruptcies

Total overall commercial bankruptcies increased by 22% in the first quarter of 2024, with 7,113 filings compared to 5,820 filings in the first quarter of 2023. This upward trend highlights the financial challenges businesses are facing in the current economic environment.

Subchapter V Elections

Subchapter V elections, which allow small businesses to reorganize under a streamlined process, also saw a significant increase of 30%, with 606 filings in Q1 2024 compared to 465 filings in Q1 2023. This suggests that more small businesses are seeking bankruptcy protection and restructuring options.

Continued Upward Trend

The upward trajectory in business bankruptcies is expected to continue throughout 2024. Factors contributing to this trend include higher costs of funds, increased interest rates, reduced consumer discretionary spending, and the anticipated normalization of bankruptcy volumes following the COVID-19 pandemic.

Chapter 11 Filings Surge

Notably, Chapter 11 filings surged by over 120%compared to the same week last year, with 147 filings this week. This remarkable spike indicates a significant uptick in business bankruptcies, reflecting the broader economic struggles companies are facing.

September 27, 2024

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