The first quarter of 2023 saw all forms of commercial bankruptcies increase. Filings reaching 5,733 were significantly more than the 4,808 business bankruptcies during the previous year’s first quarter. Even more alarming is the 77 percent increase in Chapter 11 filings, reaching 1,302 during the initial quarter of this year. The exact time last year saw 735.
In the category of Subchapter V, small business elections, at 280 in the first quarter of last year, increased 33 percent to 371 filings. Overall commercial filings are up to nearly 80 percent.
Consumers also feel the pain
This growth is occurring in the shadow of Chapter 7 consumer filings at 57,172, an increase of 12 percent. Chapter 13 filings increased 28 percent from 2022. Overall, consumer filings grew during the first quarter of 2023, growing 18 percent to 99,700 from the 84,481 consumer filings during the same period in 2022. Simply put, all types of bankruptcies continue growing, with a historic 40,000-plus since April 2021.
While the increase in total filings this year is at record levels, experts cite the historic March trend that occurs annually. Traditionally, it is the highest month for filings every year.
In spite of consistent statistics for March, let alone any month of the year, the increase in debt for businesses, not to mention consumers, with inflation only makes a bad situation potentially worst. Companies and households are struggling. Many are turning to more borrowing while they wait for the financial reprieve that comes with bankruptcy.
The “American Dream” of owning a business can become a nightmare when financial struggles impact an enterprise’s bottom line. The complexity of the process and specific statutes are complex and may require the help of a skilled and knowledgeable commercial bankruptcy attorney.