Commercial Chapter 11 bankruptcy filings climbed 118% year over year in February 2024, with the 822 filings during the month comparing to the 377 filings in February 2023, according to Epiq Bankruptcy, a 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% 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% to 213 in February 2024, up from 120 in February 2023.
There were 39,014 total bankruptcy filings in February, a 22% 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% 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, a 25% increase over the 15,717 filings recorded in February 2023, and there were 14,871 individual Chapter 13 filings in February, a 9% increase over the 13,678 filings last February.
February’s bankruptcy filing totals also registered an increase over last month’s filings. Commercial Chapter 11s increased 77% from January’s 464 filings. Overall commercial filings increased 20% from the 2,114 filings registered in January. Subchapter V elections within Chapter 11 increased 22% from the 175 filings in January. Total bankruptcies increased 7% over January’s 36,618 filings, and consumer bankruptcies edged up 6% over January’s total of 34,504. Individual Chapter 7s increased 8%, and Chapter 13s increased 3% from January’s filings.
“Once again, individual and commercial new bankruptcy filings increased double digit percentages from both a monthly and annual perspective,” Michael Hunter, vice president of Epiq AACER, said. “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,” Amy Quackenboss, executive director of the American Bankruptcy Institute, said. “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. The American Bankruptcy Institute’s Subchapter V task force will present its final report and recommendations for the limit at the 2024 ABI Annual Spring Meeting in Washington, D.C., in April. On Dec. 15, 2023, the task force transmitted its preliminary report on the subject to Congress, with the findings supporting permanently maintaining the eligibility limit of $7.5 million in aggregate noncontingent, liquidated debt for small businesses looking to reorganize under Subchapter V.
