Commercial chapter 11 bankruptcy filings climbed 118 percent in February 2024, with the 822 filings versus the 377 filings in February 2023, according to data provided by Epiq Bankruptcy, the leading provider of U.S. bankruptcy filing data. The sizable increase in commercial chapter 11 filings in February was spurred by a large number of related filings in two large commercial chapter 11 proceedings.
Total February commercial filings increased 48 percent to 2,546 from the 1,720 commercial filings in February 2023. Small business filings, captured as subchapter V elections within chapter 11, increased 78 percent to 213 in February 2024, up from 120 the previous year.
Total bankruptcy filings were 39,014 in February 2024, a 22 percent increase from the February 2023 total of 31,909. February marks 19 consecutive months that total, individual, and commercial bankruptcy filings have registered monthly year-over-year increases.
Individual bankruptcy filings increased 21 percent in February to 36,468, up from the February 2023 individual filing total of 30189. There were 21,158 individual chapter 7 filings in February 2024, a 25 percent increase over the 15,717 filings recorded in February 2023, and there were 14,871 individual chapter 13 filings in February 2024, a 9 percent increase over the 13,678 filings last February.
“Once again individual and commercial new bankruptcy filings increased double digit percentages from both a monthly and annual perspective,” said Michael Hunter, Vice President of Epiq AACER. “This underscores the continued and anticipated increase towards a normalization of pre-pandemic volumes for those seeking bankruptcy protection. We anticipate this momentum of filings to continue this upward trend.”
“Bankruptcy provides a proven path for struggling consumers and businesses looking for a financial fresh start amid the challenging economic terrain of inflation, elevated interest rates and tighter lending terms,” said ABI Executive Director Amy Quackenboss. “Congressional consideration of extending or permanently making the expanded eligibility limit of small businesses electing to file for subchapter V under chapter 11 before it expires in June would maintain greater access to this reliable path for small businesses to successfully restructure, reduce liquidations and save jobs.”
The debt eligibility limit of $7.5 million for small businesses looking to elect subchapter V reorganization under chapter 11 is due to sunset back to $2,725,625 in late June. ABI's Subchapter V Task Force will present its final report and recommendations at the 2024 ABI Annual Spring Meeting in April in Washington, D.C. The Task Force on Dec. 15, 2023, transmitted its “Preliminary Report of ABI’s Subchapter V Task Force on Maintaining the $7,500,000 Debt Cap for Subchapter V Eligibility” to Congress, and its findings support permanently maintaining the eligibility limit of $7.5 million in aggregate noncontingent, liquidated debt for small businesses looking to reorganize under subchapter V.
February’s bankruptcy filing totals also registered an increase over last month’s filings. Commercial chapter 11s increased 77 percent from January’s 464 filings. Overall commercial filings increased 20 percent from the 2,114 filings registered in January. Subchapter V elections within chapter 11 increased 22 percent from the 175 filings in January 2024. Total bankruptcies increased 7 percent over January’s 36,618 filings, and consumer bankruptcies edged up 6 percent over January’s total of 34,504. Individual chapter 7s increased 8 percent, and chapter 13s increased 3 percent from January’s filings.