Business bankruptcies have risen steadily since 2023, reflecting a broad-based increase in financial stress across the economy. After reaching historically low levels during and immediately following the pandemic, filings have increased for three consecutive years, driven by higher interest rates, inflation, tighter credit conditions, rising labor costs, and mounting debt burdens. The first half of 2026 indicates that the upward trend remains intact, particularly among small and middle-market companies. The current trajectory suggests a prolonged restructuring cycle rather than a temporary blip.
Business bankruptcy filings increased from 17,051 in 2023 to 22,762 in 2024 and 24,039 in 2025, representing cumulative growth of approximately 41% over two years. During the first six months of 2026, business filings reached 17,285, a 13% increase over the same period in 2025. At the current pace, full-year 2026 filings are likely to exceed 2025 levels.
Commercial Chapter 11 filings, often viewed as a leading indicator of corporate distress, increased 28% year-over-year during the first half of 2026. In the first quarter alone, Chapter 11 filings rose 37%, signaling growing pressure on companies seeking to restructure rather than liquidate.
Particularly notable is the increase in Subchapter V filings, the restructuring vehicle designed for small businesses. These filings rose 50% during the first half of 2026 compared to the prior year, suggesting that smaller privately held businesses are experiencing disproportionate financial strain.
Several economic factors are contributing to the rise in bankruptcies:
Retail remains one of the most distressed sectors. Higher consumer debt levels, inflation, and continued shifts toward e-commerce have challenged traditional retailers and consumer products businesses. Large-company bankruptcy activity has been concentrated in consumer discretionary sectors, including apparel, specialty retail, and home furnishings.
Healthcare has become a significant area of concern. Hospitals, physician groups, skilled nursing facilities, and other healthcare providers continue to face labor shortages, rising wage costs, reimbursement pressures, and higher financing expenses. Healthcare was among the sectors with elevated large-company bankruptcy activity during 2025.
Industrial and manufacturing companies have experienced increasing stress from rising borrowing costs, slower economic growth, and reduced demand in selected end markets. Companies with significant capital requirements and leverage have been particularly vulnerable.
Commercial real estate faces substantial refinancing risk as loans originated during the low-rate environment mature. Office properties remain under pressure from elevated vacancy rates, while some multifamily and regional property owners are challenged by higher borrowing costs and declining asset values.
Restaurants and hospitality operators continue to struggle with labor inflation, food costs, occupancy expenses, and compressed margins. Independent and regional operators appear particularly vulnerable.
The sharp increase in Subchapter V filings suggests that bankruptcy stress is increasingly concentrated among privately held small and middle-market companies across multiple industries, including construction, manufacturing, retail, professional services, and franchising.
The bankruptcy environment remains challenging heading into the second half of 2026. While economic growth has remained positive, businesses continue to face elevated borrowing costs, constrained access to capital, and refinancing challenges. The persistence of double-digit growth in overall filings, Chapter 11 restructurings, and small-business bankruptcies indicates that financial stress remains widespread.
Fortunately, credit risk mitigation tools remain available. US trade credit insurance carriers, while increasingly concerned, remain open. US corporates and middle-market companies can access these markets and help protect their enterprises.