Commercial Chapter 11 Filings Increase 34% Y/Y in May

According to data provided by Epiq Bankruptcy, a provider of U.S. bankruptcy filing data, there were 330 commercial Chapter 11 filings registered in May 2022, an increase of 34% from the 246 filings in May 2021. Total commercial filings decreased 4% in May 2022, as the 1,738 filings were down from the 1,813 commercial filings registered in May 2021.

Small business filings, captured as subchapter V elections within Chapter 11, registered an increase of 21% to 123 in May 2022 from 102 in May 2021. Total bankruptcy filings were 31,314 in May 2022, a 10% decline from the May 2021 total of 34,783. Non-commercial bankruptcy filings totaled 29,576 in May 2022, also registering a 10% decrease from the May 2021 non-commercial total of 32,970.

“The bankruptcy market continues to navigate uncharted waters as the effect of the global pandemic lingers and uncertainty around the U.S. public markets enters the mix,” Chris Kruse, senior vice president of Epiq, said. “If the economy declines, the bankruptcy market will likely become more active.”

May’s commercial Chapter 11 filings increased 32% from the 250 filings in April 2022. The commercial filing total represented a 2% decrease from the April 2022 commercial filing total of 1,775. Subchapter V elections within Chapter 11 increased 23% from the 100 filed in April 2022. May’s total bankruptcy filings represented a 4% decrease when compared to the 32,518 total filings recorded in April. Total non-commercial filings for May also represented a 4% decrease from the April non-commercial filing total of 30,743.

“Rising interest rates, inflationary price increases and global supply concerns are compounding the economic challenges for financially distressed families and businesses,” Amy Quackenboss, executive director of the American Bankruptcy Institute, said. “Legislation currently being considered in the House would expand the debt-eligibility limits for small businesses and individuals that would create greater access and a more efficient process for families and businesses looking for a financial fresh start.”

The debt-eligibility limit for small businesses to elect subchapter V reverted in March to the original $2,725,625 threshold from the expanded amount of $7.5 million first established under the CARES Act of 2020. Legislation was passed in the Senate in April to restore the eligibility limit back to $7.5 million and cover any subchapter V cases that were pending at the time of the March 27 sunset. Consistent with the recommendations of ABI’s Commission on Consumer Bankruptcy, the substitute also continues to push for the debt limit for individual Chapter 13 filings to be increased to $2.75 million and to remove the distinction between secured and unsecured debt for that calculation. Both expanded eligibility limits for small business subchapter Vs and consumer Chapter 13s would sunset after two years.

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