Chapter 11 Filings Rise 78% Y/Y in September, Up 33% Overall in 2020

According to Epiq, continuing the trend from August, commercial Chapter 11 filings in September were up 78% compared with September 2019, with 747 new filings vs. 420 during September of last year. In the first three quarters of 2020, Chapter 11 commercial filings are up 33% over the same period last year, with a total of 5,529 filings.

“After a slower August, we see an increase Chapter 11 filings in September both month over month and year over year,” Deirdre O’Connor, managing director of corporate restructuring at Epiq, said. “These commercial filings are primarily small businesses that do not have access to capital or stimulus. Unfortunately, those bankruptcies will continue to rise in the current economic environment. For the largest companies, opportunistic investors are providing much needed capital to supplement the lending capabilities of more constrained traditional banks. However, the most over-leveraged distressed companies could succumb to a formal restructuring due to lack of credit support and overall sector decline.”

“Non-commercial bankruptcy filing activity continues to decline since the beginning of the COVID-19 global pandemic,” Chris Kruse, senior vice president of Epiq AACER, said. “Regulatory programs have effectively kicked the can down the street by injecting liquidity into the market, delaying new bankruptcy filings.”

Chapter 13 non-commercial filings are down 43% in 2020, with 118,306 filings, which is down from 206,933 filings from the same period in 2019. Chapter 7 non-commercial filings were down 23% in September 2020 with 27,027 new filings, which is down from 34,957 filings for the same period in 2019.

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