The number of chapter 11 business bankruptcies rose 29% last year even as plunging consumer bankruptcies kept overall U.S. filings at their lowest level since 1986.
More than 7,100 business entities filed chapter 11 petitions last year as the coronavirus pandemic and government-imposed lockdowns crimped revenues, according to legal-services provider Epiq Systems Inc.
Although individual filings were down substantially last year, consumer bankruptcies are typically a trailing economic indicator and are expected to rise significantly in the second half of 2021, said Epiq Senior Vice President Chris Kruse.
Judah Gross, director at Fitch Ratings, said he believes chapter 11 filings could continue to increase as troubled companies last year were able to avoid a bankruptcy filing thanks to the federal government’s economic interventions.
Likewise, Mr. Gross said, individual filings might rise when mortgage forbearance programs and other coronavirus relief for consumers begin to expire.
