Chapter 11 Filings Increase 72% in 2023

Close up of petition for bankruptcy form | Image by Kenishirotie/Shutterstock

Mounting corporate debt, decades-high interest rates, and stricter lending standards triggered a tsunami of bankruptcy filings in 2023.

In total, 445,186 companies sought some form of bankruptcy protection in 2023, an 18% increase from the 378,390 registered in 2022, according to data from Epiq AACER, the leading provider of U.S. bankruptcy filing data.

The number of companies filing to reorganize their debt also rose. Commercial Chapter 11 filings — also known as reorganization bankruptcy — jumped to 6,569 in 2023 from 3,819 in 2022, marking a 72% increase year over year.

“As anticipated, we saw new filings in 2023 increase momentum over 2022 with a significant number of commercial filers leading the expected increase and normalization back to pre-pandemic bankruptcy volumes,” said Michael Hunter, vice president of Epiq AACER.

“We expect the increase in number of consumer and commercial filers seeking bankruptcy protection to continue in 2024 given the runoff of pandemic stimulus, increased cost of funds, higher interest rates, rising delinquency rates, and near historic levels of household debt.”

Overall, commercial filings and consumer filings rose 19% and 18%, respectively, in 2023. Commercial filings increased to 25,627 from the 21,479 registered the previous year, while consumer filings climbed to 419,559 from 356,911 in calendar year 2022.

While 2023 represented a substantial year-over-year increase, total bankruptcy filings managed to stay below pre-pandemic levels. For instance, total bankruptcy filings were roughly 758,000 in 2019, meaning about 70% fewer companies/consumers pursued bankruptcy protection in 2023.

“Though still below pre-pandemic figures, bankruptcies in all filing categories climbed last year amid the evaporation of pandemic emergency responses, increased interest rates, and tougher lending standards,” said Amy Quackenboss, ABI executive director.

“As interest rates remain elevated, increasing geopolitical tensions weigh on global supply chains and debt loads continue to grow, struggling businesses and families can turn to the proven process of bankruptcy for a financial fresh start.”

As for total bankruptcies in December, data shows that 34,447 filings were recorded in 2023, a 16% increase from the 29,654 recorded in December 2022. A total of 2,057 commercial filings and 32,390 consumer filings were made during the month, representing a 16% and 18% increase, respectively.

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