The 987 total commercial chapter 11 bankruptcies filed during the first six months of 2024 represented a 70 percent increase over the 582 filed during the same period in 2023, according to data provided by Epiq AACER, the leading provider of U.S. bankruptcy filing data.
All chapters increased in June 2024 compared to June 2023. Overall commercial filings registered 2,743 for the first half of 2024, representing a 27 percent increase from the commercial filing total of 2,154 for the first half of 2023. Small business filings, captured as subchapter V elections within chapter 11, totaled 306 in the first six months of 2024, a 76 percent increase from the 174 elections during the same period in 2023.
“Commercial filing trends continue to show strong double-digit percentage increases in year-over-year filings, while individual filings increased at a much lower rate compared to commercial filings in the first half of 2024,” said Michael Hunter, vice president of Epiq AACER. “I expect a strong demand in individual filings ahead of us, especially considering the large increase in commercial filings, consumer debt levels, high interest rates, and overall increased costs with relatively flat household income. The time frame from the onset of individual financial stress to a bankruptcy filing is generally six to 18 months.”
Total bankruptcy filings were 40,262 during the first six months of 2024, a 7 percent increase from the 37,790 total filings during the same period a year ago. Total individual filings registered a 5 percent increase, as the 37,519 filings during the first half of 2024 were up from the 35,636 filings during the first six months of 2023. The 15,228 individual chapter 13 filings in the first half of 2024 represent a 2 percent increase over the 14,991 filings during the same period in 2023.
“The continued increase in bankruptcy filings reflects the growing economic strain on businesses and households,” said ABI Executive Director Amy Quackenboss. “We hope that efforts continue on Capitol Hill to reinstate higher debt-eligibility limits for small businesses and chapter 13 filers to create greater access and a more efficient process for small businesses and families to achieve a financial fresh start.”
Due to a statutory sunset that was unable to be extended by Congress before June 21, the enhanced subchapter V debt limit established in March 2020 dropped from $7,500,000 to $3,024,725, and the chapter 13 threshold of $2,750,000 for both secured and unsecured debt reverted back to a two-part test limiting eligibility to a maximum of $465,275 for unsecured debt and $1,395,875 for secured debt.
Sen. Richard Durbin (D-Ill.), who, along with a group of bipartisan senators, had introduced S. 4150 on April 17 to extend the enhanced limits for subchapter V elections and chapter 13 filers for an additional two years, has vowed to continue to try to restore greater access for small businesses and consumers. ABI's Subchapter V Task Force in its Final Report and recommendations to Congress supports an eligibility limit of $7.5 million in aggregate noncontingent, liquidated debt for small businesses looking to reorganize under subchapter V.