Business Bankruptcies Jump 34 Percent in First Half of 2024

Bankruptcy filings by commercial entities grew by more than a third this year as businesses struggled under an environment of high costs and interest rates, according to the American Bankruptcy Institute (ABI).

A total of 3,016 commercial Chapter 11 bankruptcies were filed in January–June this year, up 34 percent from last year, according to a July 3 ABI press release. Small-business filings rose by 61 percent. Total bankruptcy filings rose by 15 percent, with individual filings increasing by 15 percent.

“The continued increase in bankruptcy filings reflects the growing economic strain on businesses and households,” said ABI Executive Director Amy Quackenboss.

Michael Hunter, vice president of bankruptcy data provider Epiq AACER, said he expects an increase in individual filings ahead, “especially considering the large increase in commercial filings, consumer debt levels, high interest rates, and overall increased costs with relatively flat household income.”

Businesses have been battered in an environment of high inflation and interest rates. The 12-month inflation rate has been hovering above 3 percent since June last year, although some analysts calculate it may be much higher. Meanwhile, the Federal Reserve has kept interest rates at 5.25–5.5 percent since July last year. This combination of higher expenses is putting pressure on businesses.

Despite such an environment, many executives remain positive about the future. A recent survey by professional services network Grant Thornton found that 58 percent of chief financial officers (CFOs) are optimistic about the U.S. economy, the highest in almost three years.

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Patrick Robinson

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