Rising Business Bankruptcies and the Importance of Trade Credit Insurance

Business bankruptcies in the United States have been on the rise for three consecutive years, with 2026 showing a continued increase. Factors such as higher borrowing costs, inflation, and tighter credit conditions are exerting pressure on businesses across various sectors. Notably, both Commercial Chapter 11 and Subchapter V filings are growing at a faster rate than overall business bankruptcies, signaling increased financial stress among both large and small enterprises.

Industries such as retail, healthcare, manufacturing, commercial real estate, and hospitality are feeling the greatest strain. These sectors face challenges related to refinancing, labor costs, and declining profit margins. The current trend suggests a sustained restructuring cycle, emphasizing the need for businesses to engage in proactive credit risk management and explore trade credit insurance as a viable solution.

Since 2023, business bankruptcy filings have shown a steady increase, reflecting mounting financial difficulties within the economy. After pandemic-induced lows, the number of filings has risen for three years in a row due to escalating interest rates, inflation, restricted credit conditions, increasing labor costs, and significant debt burdens. The first half of 2026 indicates that this upward trend persists, especially among small to mid-sized companies, suggesting a prolonged restructuring phase.

The number of business bankruptcy filings rose from 17,051 in 2023 to 22,762 in 2024 and 24,039 in 2025, culminating in approximately 41% growth over two years. In the first six months of 2026 alone, filings reached 17,285, marking a 13% increase compared to the same period in 2025. If this growth continues, 2026 will likely surpass 2025 figures.

Sector-Specific Financial Stress

Commercial Chapter 11 filings, an indicator of corporate distress, climbed by 28% year-over-year in the first half of 2026. The first quarter experienced a 37% surge in Chapter 11 filings, illustrating heightened pressure on companies looking to restructure over liquidation. Subchapter V filings, aimed at small businesses, increased by 50% over the same period, indicating that financial strain is hitting small businesses particularly hard.

• Retail: Higher consumer debt, inflation, and an ongoing shift to e-commerce have created challenges for traditional retailers and consumer goods businesses. Large-company bankruptcy activity has been concentrated in consumer discretionary segments like apparel, specialty retail, and home furnishings.
• Healthcare: Hospitals, physician groups, and skilled nursing facilities are struggling with labor shortages, increased wage costs, reimbursement challenges, and higher financing costs. This sector saw considerable large-company bankruptcy activity during 2025.
• Industrial and Manufacturing: Rising borrowing costs, reduced economic growth, and declining demand affect these entities, with those requiring extensive capital and leverage being especially vulnerable.
• Commercial Real Estate: This sector is experiencing refinancing risks as loans from the low-interest rate era mature. Office properties face high vacancy rates, while some multifamily and regional property owners deal with higher borrowing costs and decreasing asset valuations.
• Hospitality: Restaurants confront labor cost inflation, increasing food prices, occupancy expenses, and shrinking margins, with independent and regional operators at significant risk.

The substantial rise in Subchapter V filings reflects concentrated bankruptcy stress among small and middle-market private companies across sectors like construction, manufacturing, retail, and professional services. As the second half of 2026 approaches, the bankruptcy environment remains complex. Despite continued economic growth, businesses face elevated borrowing costs, limited capital access, and refinancing hurdles. The ongoing double-digit rise in overall filings, Chapter 11 restructurings, and small-business bankruptcies reveals widespread financial strain.

Fortunately, there are options for mitigating credit risk. U.S. trade credit insurance markets remain open, providing businesses, especially corporates and middle-market companies, routes to safeguard their operations. Figures and data sources include the U.S. Courts Judicial Business Reports (FY2023–FY2025), the American Bankruptcy Institute, Epiq AACER, Congressional Research Service, and S&P Global Market Intelligence.