A mere two months have passed since the beginning of 2025 and chapter 11 bankruptcy filings are already steadily trending upwards compared to the previous year. Specifically, in January 2025, data shows that there were 539 commercial chapter 11 filings compared to the 465 commercial chapter 11 filings in January 2024. This indicates a 16% upward trend. Additionally, overall commercial bankruptcy filings have advanced by 11% in January 2025, with 2,358 filings contrast to the 2,126 filings in January 2024. Not only has there been an increase in bankruptcies for businesses, but individual bankruptcy filings have also increased by 13% in January of this year.
The main question one may consider is why and how this situation has occurred. Multiple factors play an integral role in driving this trend upward, including high interest rates which, in turn, make it challenging for businesses to refinance existing debts. Moreover, operational costs are rising as inflation remains high and consumer spending patterns have trended downward leading to reduced revenues for a multitude of companies.
Due to current circumstances and the rise of bankruptcies, it is imperative that creditors and business owners remain vigilant and monitor debtors to evade any potential distress. Furthermore, creditors and businesses should pursue the legal rights afforded by them in securing claims and partake in a due diligence process when considering whether to restructure.
With the expectation of more consumer stress, credit card delinquency, and distressed asset sales in the upcoming months, it is paramount that these trends be recognized, and creditors take action to reduce their risk of exposure and don’t remain complacent. With the proper protection in place, creditors and businesses can weather the storm and not be forced into liquidation and actively take measures to alter the direction of these trends.
At Thomas H. Curran Associates, we assist businesses and creditors in navigating bankruptcy proceedings, ensuring that legal and financial interests are protected.
For more information, please contact us at +1 (617) 207-8670 or visit https://thcalaw.com/contact/