The number of commercial Chapter 11 bankruptcies filed during the first nine months of 2023 was 4,553, representing a 61% increase over the 2,837 filings logged during the same period in 2022, according to Bankruptcy data provided by Epiq Bankruptcy Analytics.
Overall commercial filings registered during the first three quarters of 2023 were 18,680, a 17% increase from the same period the year before. Small and large companies alike appear to be feeling the strain of soaring interest rates, a global economic slowdown, lingering inflation, and diminishing consumer purchasing power.
“Struggling individuals and companies have an established lifeline through bankruptcy to help steady themselves amid rising interest rates, inflation, and increased borrowing costs,” said Amy Quackenboss, American Bankruptcy Institute’s (ABI) executive director.
Overall, about 8,900 total bankruptcy cases, which includes all types of bankruptcy, were filed during the week ending September 24, notably higher than weekly filings during the same period in 2022 and 2021, according to the latest ABI bankruptcy analysis. For the first nine months of 2023, total individual bankruptcy filings were 313,458, marking a 17% increase from the same period in 2022.
However, ABI noted in its analysis that bankruptcy filings remain about 40% below pre-pandemic levels.
“While still below pre-pandemic levels, the numbers of filings demonstrate the difficult challenges and growing debt loads that financially distressed families and businesses are facing in this current economic environment,” said Quackenboss.
During the week ending September 24, three large companies filed for Chapter 11 protection. These include emergency room services company American Physician Partners LLC, airline charter and maintenance company Aerotech Miami, and telemedicine provider Up Health Services, Inc.
Although the number of total bankruptcy filings has surged on a year-over-year basis during the first nine months, an analysis of 2023’s second and third quarters paints a different picture in which shorter-term indicators were mixed, according to Gregg Morin, vice president of business development and revenue at Epiq Bankruptcy.
“Total quarter three filings were up two percent over quarter two, all commercial chapters were down one percent, and all individual chapters were up two percent, compared to the prior quarter-over-quarter period where all chapters increased in filing volume,” Morin said in a statement.
With the Federal Reserve forecasting more interest rates and additional policy firming, the number of struggling businesses unable to stave off bankruptcy due to swelling debt is anticipated to increase through the end of 2023 and into 2024.
According to a comprehensive credit risk assessment by CreditRiskMonitor noted in Entrepreneur Business News, the companies most likely to file for bankruptcy protection within 12 months include Farfetch, Joann, Qurate Retail, Rent the Runway, and Rite-Aid.
