According to data provided by Epiq Bankruptcy, the 2,973 total commercial Chapter 11 bankruptcies filed during the first six months of 2023 represented a 68% increase over the 1,766 filed during the same period in 2022. Individual Chapter 13 filings increased by 23% during the same period.
There were 12,107 overall commercial bankruptcy filings for the first half of 2023, representing an 18% increase from the commercial filing total of 10,258 for the first half of 2022. Small business filings, captured as Subchapter V elections within Chapter 11, totaled 814 in the first six months of 2023, a 55% increase from the 525 elections during the same period in 2022.
Overall commercial filings increased 12% in June alone, as the 2,123 filings were up from the 1,891 commercial filings registered in June 2022. The 404 commercial Chapter 11 filings in June represented a 9% increase from the 371 filings in June 2022. Total Subchapter V elections within Chapter 11 experienced a 111% increase from 94 in June 2022 to 198 in June 2023.
“The increase in commercial and individual bankruptcy filings during the first half of 2023 underscores the economic challenges faced by businesses and individuals,” Gregg Morin, vice president of business development and revenue at Epiq Bankruptcy, said. “Our objective is to provide bankruptcy professionals with timely and accurate data necessary for analyzing stakeholder volumes and trends for making informed business decisions.”
Total bankruptcy filings reached 217,420 during the first six months of 2023, a 17% increase from the 185,352 total filings during the same period a year ago. Total individual filings also registered a 17% increase, as the 205,313 filings during the first half of 2023 were up from the 175,094 filings during the first six months of 2022. The 85,390 individual Chapter 13 filings in the first half of 2023 represented a 23% increase over the 69,367 filings during the same period in 2022.
All chapters increased in June compared to June 2022, with 37,700 total bankruptcy filings representing an increase of 17% from the 32,198 filed in 2022. Total commercial filings were up 12% from 1,891. Total Individual filings were up 18% from 30,307.
“The growth in filings is reflective of more families and businesses facing surging debt loads due to rising interest rates, inflation and increased borrowing costs,” Amy Quackenboss, executive director of the American Bankruptcy Institute, said. “Bankruptcy provides a shield to the economic challenges being experienced by financially struggling individuals and companies.”
The substantial year-over-year increase in Subchapter V elections reflects statutory developments that took place last year. The Bankruptcy Threshold Adjustment and Technical Corrections Act was quickly enacted in June 2022 to restore the debt eligibility limit for small businesses back to $7.5 million while also increasing the debt limit for individual Chapter 13 filings to $2.75 million and removing the distinction between secured and unsecured debt for that calculation. The increased eligibility limits for both Subchapter V and Chapter 13 were currently set to sunset on June 21, 2024. The ABI formed a Subchapter V task force to study small business reorganization and make recommendations in a report to be released in April 2024.
Epiq and the ABI will host an abiLIVE webinar at 2 p.m. EDT on July 12 featuring experts providing insights on 2023 filing trends. Deirdre O’Connor, managing director for corporate restructuring at Epiq, will serve as the moderator with speakers including Morin, Chris Ward (president-elect of the ABI and bankruptcy and restructuring chair at Polsinelli) and the ABI’s Ed Flynn.
