Commercial Chapter 11 Filings Increase 70% in First Half of 2024

I hope that bankruptcies rise but then level out at a sustainable rate, for all of our sakes. It seems like most governments, companies, and individuals are drunk on debt right now. Slowly, steadily cutting off the rotting part sounds reasonable to me.

What are the alternatives? Dropping interest rates and allowing these sick entities continue to accumulate debt? Raising interest rates and causing a cascading effect of bankruptcies? They both sound unhealthy to me.

Lets check how many of these received PPP funding and year of incorporation.

My knee jerk question is how many of those are brick-and-mortar joints getting squeezed on the rent. Seems like it’s getting harder and harder for non-giant companies to afford rent on storefronts. Again— just random non-expert musing here.

This isn't that unusual. It's a lagging indicator of the effects of higher rates. Even 2k per year out of millions isn't bad. We certainly have other problems in the economy right now, but these bankruptcies are more of a symptom than the problem.

> Overall commercial filings registered 2,743 for the first half of 2024, representing a 27 percent increase from the commercial filing total of 2,154 for the first half of 2023

Does anyone know why Chapter 11 would increase so much more than other bankruptcy filings?

From what I understand (in my limited knowledge), Chapter 11 is the “milder” one, compared to Chapter 7, but I have no idea what that actually means for businesses in terms of the economy. Is it a good thing that there are relatively more “mild” bankruptcies? Or does this increase even says anything about the economy at all? ~2500 filings seems pretty low regardless. I feel like there is some context missing, as the article is pretty vague overall.

Only going to rise and no one should be surprised. The increasing cost of debt is causing a domino effect of bankrutcies in many industries. The only thing surprising is that it's staring a little earlier than expected. The last of the good financing was in 2020 at peak pandemic, and many took advantage. We should expect a wave of bankruptcies in 2025/2027/2030 as much of the debt rolls over and becomes unmangagable. Same is true for commerial leases.

I'm definitely feeling it. Between Jan 31 and today I've had several companies just stop paying. They can't. Lines of credit have been either cut, or reissued at onworkable rates, or both.

At the local level you also have a lot of smaller businesses that simply piled on debt during COVID and tried to ride it out, but there was never really any hope.

I feel like commercial bankruptcy filings alone don't tell the whole picture. Did the number of newly created commercial entities increase, flat out or decrease in the years leading up to this? Comparatively how much? Without context, one number isn't enough to make anything of it.

Who's left holding what bags?