New Bankruptcy Filings Soar Across All Industries, as Corporate Filings Reach Highest Since 2010

New Bankruptcy Filings Soar Across All Industries, as Corporate Filings Reach Highest Since 2010
Outside the U.S. District Bankruptcy Court for the Southern District of New York on Jan. 9, 2020. (Brendan McDermid/Reuters)
Katabella Roberts

New bankruptcy filings across all major industries saw year-over-year increases for the third month in a row in March, with corporate bankruptcy filings reaching their highest first-quarter levels since 2010.

A total of 42,368 new bankruptcies were filed in March, up 17 percent from the 36,068 filings registered a year prior, according to data from Epiq Bankruptcy, which provides U.S. bankruptcy court data, technology, and services.

That marks the highest number of monthly filings since 40,931 bankruptcies were recorded in April 2021.

Year-over-year commercial bankruptcy filings were up by 24 percent to 2,305 last month compared to 1,854 in March 2022, while Chapter 11 filings (including Subchapter V) increased by 79 percent to 548, from the 306 filings registered the previous year.

Total individual filings increased by 17 percent to 40,063 versus 34,214 in March 2022, according to the data.

Separate data from S&P Global Market Intelligence showed 71 corporate bankruptcy petitions in March, up from 58 in February and marking the fourth straight month of increases and the highest monthly total since July 2020.
The financial and health care sectors saw the highest amount of bankruptcy filings, according to the data, although filings were seen across the energy, communication, and real estate sectors.

SVB Collapse Affects Financial Sector

March’s bankruptcy filings brought the corporate year-to-date total to 183 as of March 31, which S&P Global stated was “more than any comparable period in the past 12 years.”

Perhaps the most notable bankruptcy filing last month came from the financial sector after Silicon Valley Bank (SVB) filed for a court-supervised reorganization under Chapter 11.

SVB was the 16th-largest bank in the United States, with $209 billion in assets as of Dec. 31, 2022, according to the Federal Reserve.

Its collapse marked the second-largest bank failure in U.S. history and put pressure on the other small and regional banks in the United States, including Signature Bank—one of the main banks in the cryptocurrency industry—sending customers racing to pull their deposits.

Signature Bank was subsequently closed by New York state financial regulators on March 2.
Silvergate Bank, a crypto-focused financial institution, also announced earlier in March that it plans to wind down its operations and voluntarily liquidate, citing “recent industry and regulatory developments.”
First Republic, which listed roughly $213 billion in total assets and is the fourteenth-largest bank in the United States, also felt the effects, despite attempts to reassure depositors that it wouldn’t suffer the same fate as SVB and Signature.

‘Growing Debt Burdens’

The California-headquartered First Republic ultimately received a rescue deal worth about $30 billion from 11 of the largest U.S. financial institutions in order to help it stabilize after its stocks plunged.

Gregg Morin, vice president of business development and revenue for Epiq Bankruptcy, said in an April 3 statement that while total bankruptcy filings are up for the third month in a row and exceeded the 40,000 level for the first time in two years, the rise in filings coincides with a “historical trend of March consistently being the highest month for filings every year.”

However, American Bankruptcy Institute Executive Director Amy Quackenboss noted that the rise in bankruptcy filings in the first quarter of 2023 demonstrates the “growing debt burdens of both consumers and businesses” amid soaring inflation and interest rate hikes, which have, in turn, affected borrowing costs.

“As inflationary prices have increased in tandem with the cost of borrowing, struggling companies and households have access to a financial reprieve through the bankruptcy process,” Quackenboss said.

Despite the rising number of bankruptcy filings and the fallout from SVB’s collapse, Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, told CBS’s “Face the Nation” on March 26 that it’s still too early to determine if the failure will tip America toward an economic downturn.

“It definitely brings us closer,” he said. “What’s unclear for us is how much of these banking stresses are leading to a widespread credit crunch. That credit crunch ... would then slow down the economy. This is something we are monitoring very, very closely.”