According to Epiq Bankruptcy, commercial Chapter 11 filings increased 105% in May 2023 to 680 versus the 332 filings in May 2022. Nearly half of the Chapter 11 filings were made by corporate subsidiaries.
Overall commercial filings increased 31% in May 2023 to 2,324 versus the 1,771 registered in May 2022. Small business filings, captured as Subchapter V elections within Chapter 11, registered a 31% increase to 149 in May 2023 versus 114 in May 2022.
Total and individual bankruptcies also continued to increase from the reduced volumes experienced during the first three years of the COVID-19 pandemic. The 38,669 total filings in May 2023 represented a 23% increase from the May 2022 total of 31,330. Individual bankruptcy filings totaled 36,345 in May 2023, also registering a 23% increase from the May 2022 individual total of 29,559. Individual Chapter 13 filings increased 25% to 14,644 and individual Chapter 7 filings increased 22% to 21,625 from May 2022.
“Rising interest rates, inflation and elevated costs of borrowing can represent a daunting economic challenge to struggling families and businesses,” Amy Quackenboss, executive director of the American Bankruptcy Institute, said. “Amid these sustained economic pressures, bankruptcy provides financially distressed companies and households with access to a release valve.”
May’s total bankruptcy filings represented a 9% increase over the 35,485 total filings recorded in April. May’s commercial Chapter 11 filings increased 76% from the 387 filings in April. The total commercial filing represented a 27% increase over April’s commercial filing total of 1,835. May Chapter 11 Subchapter V elections increased 12% from the 158 filed in April. Total May individual filings represented an 8% increase from the April individual filing total of 33,650.
“We have been diligently monitoring the ongoing trend of monthly new filings versus cases closed and it serves as another indicator for the direction of the bankruptcy market,” Gregg Morin, vice president of business development and revenue for Epiq Bankruptcy, said. “After 35 consecutive months (April 2020February 2023) of more closed cases than new filings each month, the market had two consecutive months (March and April) of more new filings than closed cases. However, once again in May, 413 more cases closed than opened, and year to date, there are still 5,014 more closed cases than new filings.”
