An elevated level of bankruptcies continues to plague corporate America, with 117 more “large” companies making Chapter 7 or Chapter 11 filings over the 12 months ended June 30.
While that was a modest increase from 113 such filings during the prior 12-month period, it was 81% above the annual average rate of 44 from 2005 through 2024, Cornerstone Research reported.
“Mega-bankruptcies,” or those by companies with more than $1 billion in assets, increased to 32 during the studied period, up from 24 in the prior 12 months and well above the 20-year annual average of 23. (The report defined “large” companies as those with $100 million to $1 billion in assets.)
The higher pace of bankruptcies began in early 2023 and has remained elevated since then.
Most recently, there were 17 mega-bankruptcies in the first half of this year, the most in any half-year period since the COVID outbreak in 2020.
As to drivers of bankruptcies, in their first-day declarations the largest filers commonly cited (1) reduced demand or increasing costs due to inflation, (2) reduced demand due to consumer preference, market competition or industry factors, (3) increasing operational and financing costs due to high interest rates and (4) challenges in the regulatory, legal and policy landscape.
Additionally, after-effects from the COVID pandemic continue to be a drain, with about half of the mega-bankruptcy filers citing lasting negative impacts. That was down, though, from 79% in the 12 months prior to the study period.
Among industries, manufacturing had the highest share of bankruptcy filings, accounting for 30% of the total. Then followed the services industry (24%), the finance/insurance/real estate industry (13%), transportation/communications/utilities (10%) and retail trade (10%).
Bucking the trend was the cryptocurrency sector, where there have been no bankruptcies since the first half of 2023.
Cornerstone noted that U.S. financial markets “have presented a complex landscape of signals” since early 2024, with equities showing strong but volatile gains despite underlying economic uncertainties.
“While the S&P 500 rallied on optimism around the Federal Reserve’s easing monetary policy, credit markets signaled growing concerns,” Cornerstone wrote. This was “evidenced by widening high-yield credit spreads, a rising “dual-track” default rate, and growing delinquency rates in the commercial real estate market.”
Meanwhile, in addition to bankruptcies, liability management transactions — or financial activities designed to alter a company’s outstanding debt structure — are also on the rise. The 46 completed LMTs in 2024 represented a new annual record, and momentum accelerated in the first half of 2025, with 27 additional transactions.
