According to Epiq, 2020 had the lowest number of bankruptcy filings in the U.S. since 1968, with a total of 529,068 filings across all chapters.
For December, the total new U.S. bankruptcy filings across all chapters was 34,304 for the month, the lowest monthly total since January 2006. However, Chapter 11 filings continued to grow year-over-year, rising 29% to 7,128 new filings in 2020 compared with 5,518 in 2019.
“The peak in Chapter 11 filings for Q2 and Q3 is due to preexisting distressed companies coupled with the onset of a zero-revenue environment. The federal backstop proved a vital lifeline for the stabilization of corporations to protect the U.S. economy,” Deirdre O’Connor, managing director of corporate restructuring at Epiq, said. “This federal intervention created record breaking capital deployment fueled by investors chasing yield as companies attempt to ride out this storm.”
“New bankruptcy filings continue to slide into record territory as the global pandemic spurs regulatory intervention to keep U.S. consumers and businesses afloat,” Chris Kruse, senior vice president of Epiq AACER, said. “The second stimulus package totaling over $900 billion is getting capital into the market and delaying bankruptcy filings across the country.”
Chapter 13 non-commercial filings in December decreased 46% in 2020 with 147,144 filings, down from 272,420 filings for all of 2019. Chapter 7 non-commercial filings were down 22% in 2020 with 348,428 new filings, down from 444,931 for all of 2019. These two categories are a bellwether for the U.S. consumer market, as they are a trailing economic indicator of the overall strength of a market where unemployment continues to ravage the country.
“We expect this category to grow substantially in the second half of 2021,” Kruse said.
