New bankruptcy filings during Q1/24 registered year-over-year increases across all major filing categories in the U.S., according to data provided by Epiq Bankruptcy.
Total commercial Chapter 11 filings (including Subchapter V filings) registered the largest increase, as the 1,894 filings during the quarter were up 43% from the 1,325 total commercial Chapter 11 filings during the same period in 2023. Total overall commercial bankruptcies increased 22 percent in quarter, as the 7,113 filings surpassed the 5,820 commercial filings during Q1/23. Subchapter V elections for small businesses increased 30% to 606 filings in Q1/24 from the 465 filed during Q1/23.
There were 120,094 total bankruptcy filings in Q1/24, representing a 14% increase from the 105,497 total filings during the same period last year. Consumer filings increased 13% to 112,981 filings Q1/24 from the 99,677 consumer filings during the same period in 2023. There were 66,861 individual Chapter 7 filings during Q1/24, a 17% increase over the 57,158 individual Chapter 7 filings during the same period in 2023. In addition, there were 45,958 individual Chapter 13 filings during Q1/24, marking a 9% increase over the 42,362 individual Chapter 13 filings in the same period of 2023.
“As we expected, the upward trajectory in both commercial and individual related bankruptcy filing volumes continue,” Michael Hunter, vice president of Epiq AACER, said. “March marks 20 consecutive months that total, individual and commercial bankruptcy filings have registered monthly year-over-year increases. Factors contributing to this trend are the higher cost of funds and interest rates, a reduction in consumer discretionary spending, higher housing, costs, and a continued drawdown of excess savings. These factors, coupled with the post-pandemic anticipated normalization of bankruptcy volumes, lead me to believe this upward trend will continue through 2024.”
New bankruptcy filings in March 2024 also registered year-over-year increases across all U.S. major filing categories. A total of 44,453 new bankruptcies were filed in March, up 5% from the 42,412 filings registered in March 2023.
Year-over-year commercial filings rose 3% to 2,434 compared to 2,372 in March 2023. Commercial Chapter 11 filings (including Subchapter V filings) increased 6% to 605 versus the 570 filings registered last March. Subchapter V elections in March represented the largest monthly increase, as the 217 filings were up 50% over the 145 filings in March 2023.
Total individual filings increased 5% in March to 42,019 versus the 40,040 in March 2023. Year-over-year individual Chapter 7 filings increased 7% to 26,124 versus the 24,455 in March 2023, and individual Chapter 13 filings were up 2% to 15,844 versus 15,532 in March 2023.
“Bankruptcy is an indispensable tool for distressed consumers and businesses aiming to repair their balance sheets in this challenging economic environment,” Amy Quackenboss, executive director of the American Bankruptcy Institute, said. “As the expanded eligibility limit that enabled more struggling small businesses to reorganize under Subchapter V is set to expire in June, ABI’s Subchapter V Task Force will soon be releasing its final report urging Congress to extend or permanently maintain the increased limit, allowing more small businesses to successfully restructure, reduce liquidations and save jobs.”
The debt eligibility limit of $7.5 million for small businesses looking to elect a Subchapter V reorganization under Chapter 11 of the U.S. Bankruptcy Code is due to sunset back to $2,725,625 in late June. The ABI’s Subchapter V Task Force will present its final report and recommendations at the 2024 ABI Annual Spring Meeting on April 19 in Washington, D.C. On Dec. 15, 2023, the task force transmitted its preliminary report on the subject to Congress, and its findings supported permanently maintaining the eligibility limit of $7.5 million in aggregate noncontingent, liquidated debt for small businesses looking to reorganize under Subchapter V.
