Small business filings, captured as subchapter V elections within chapter 11, registered a 53% increase to 228 in May 2024 from 149 in May 2023, according to data provided by Epiq AACER. Commercial chapter 11 filings increased 11% in May 2024 to 759 from the 683 filings in May 2023. Overall commercial filings also increased 11% in May 2024 to 2,618 from 2,361 in May 2023.
The 44,980 total U.S. bankruptcy filings in May 2024 increased 16% from the May 2023 total of 38,696. Noncommercial bankruptcy filings registered a 17% increase to 42,362 in May 2024 from the May 2023 noncommercial total of 36,335. The number of consumers filing for chapter 7 increased 19% to 25,772 in May 2024 from the 21,624 who filed for chapter 7 last year, while chapter 13 filings increased 13% to 16,509 in May 2024 from the 14,641 chapter 13 filings in May 2023.
“As anticipated, we continue to observe significant year-over-year growth in commercial business filings,” Michael Hunter, vice president of Epiq AACER, said. “This trend persists due to elevated interest rates and rising operational expenses, which continue to strain business profitability. Additionally, consumer filings exhibit robust increases driven by escalating household costs, historically high levels of household debt and relatively stagnant household income. These factors collectively contribute to the ongoing necessity and increased demand for consumers and businesses to seek bankruptcy protection.”
“More distressed small businesses are continuing to turn to subchapter V relief amid an economic climate of inflationary pricing and higher borrowing costs,” Amy Quackenboss, executive director of the American Bankruptcy Institute (ABI), said. “With the enhanced subchapter V eligibility limit of $7.5 million set to sunset on June 21, we support legislative efforts to extend and maintain greater access for distressed small businesses and families to reorganize their debts.”
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 on June 21. Sen. Richard Durbin (D-Ill.) and a group of bipartisan senators introduced S. 4150 on April 17 to extend the $7.5 million eligibility limit for small businesses looking to access subchapter V relief to 2026. The bipartisan measure also maintains the debt limit for individual chapter 13 filings at $2.75 million and removes the distinction between secured and unsecured debt for that calculation.
ABI’s Subchapter V Task Force released its final report and recommendations to Congress on April 19, and its findings support maintaining the eligibility limit of $7.5 million in aggregate noncontingent, liquidated debt for small businesses looking to reorganize under subchapter V.
May’s total bankruptcy filings represented a slight decrease of 3% from April’s total of 45,606. Total noncommercial filings for May represented a 2% decrease from the April 2024 noncommercial filing total of 43,025. The commercial filing total represented a 1% increase from the April 2024 commercial filing total of 2,581. Commercial chapter 11 filings increased 40% over the 542 filings in April 2024. Subchapter V elections within chapter 11 declined 2% from 233 the previous month. Consumer chapter 7 filings decreased 4% from the 26,777 chapter 7s filed in April 2024, while 13 filings increased 2% over the 16,175 filings last month.
