Commercial Chapter 11 filings are up 43% over June of last year, with 609 new filings, up from 424 from the same period last year, according to Epiq, a global leader in legal services. For the first half of 2020, total commercial Chapter 11 filings are up 26% with 3,604 new filings, up from 2,855 from the same period last year.

“As expected, U.S. companies are seeking bankruptcy protection while the markets are recovering from the early stages of the global pandemic,” says Deirdre O’Connor, managing director for corporate restructuring at Epiq. “In challenging economic environments, companies attempt to file at the right time to capture the best outcomes at the end of the lengthy process.”

The new law for Subchapter V of Chapter 11 of the Bankruptcy Code went into effect on February 19, 2020 as a result of the 2019 Small Business Reorganization Act (SBRA). The law was designed to help small businesses move through the bankruptcy process more quickly and with lower costs. Since its introduction, there have been 506 Code Subchapter V filings, with 133 of those occurring in June. Although Subchapter V was not created to respond to the COVID-19 crisis, the arrival of this new option may be the lifeline that small businesses need to survive it.

Overall, U.S. bankruptcy filings across all Chapters are down 30% over June of last year, with 42,411 new filings, down from 61,100 from the same period last year. For the first half of 2020, total new U.S. bankruptcy filings across all Chapters are down 23% from the same period last year with 298,077 new filings, down from 369,006 from the same period last year.

“The market is anticipating a wave of new filings related to the high unemployment rate,” says Chris Kruse, senior vice president at Epiq AACER. “However, we expect to see overall filings continue to trend down until the government programs that inject liquidity into the economy for companies and individuals come to an end.”

Epiq, a global leader in the legal services industry, takes on large-scale, increasingly complex tasks for corporate counsel, law firms, and business professionals with efficiency, clarity, and confidence. Clients rely on Epiq to streamline the administration of business operations, class action and mass tort, court reporting, eDiscovery, regulatory, compliance, restructuring, and bankruptcy matters.