340 U.S. firms filed for bankruptcy in the first half of 2023, setting a new 13-year high

In the first half of 2023, there was a significant increase of 68% in U.S. Chapter 11 bankruptcy filings compared to the previous year, according to Epiq Bankruptcy, a provider of data on U.S. bankruptcy filings.

Several well-known entities like SVB Financial Group, Envision Healthcare Corp,  Party City Holdco, Lordstown Motors, and Kidde-Fenwal were among those negatively affected by historically high interest rates and persistent inflation as the period of easy monetary conditions came to an end.

This surge in bankruptcy filings can be attributed to both households and businesses grappling with mounting debt burdens caused by escalating interest rates, inflation, and heightened borrowing expenses, as highlighted by Amy Quackenboss, the executive director of the American Bankruptcy Institute.

The Federal Reserve has implemented a series of 10 consecutive interest rate hikes, resulting in a target range of 5%-5.25%, thereby increasing borrowing costs for both companies and individuals.

Although the U.S. central bank decided to maintain interest rates in June, it anticipates two more rate hikes by the conclusion of 2023.

During the initial half of 2023, a total of 2,973 commercial Chapter 11 bankruptcy cases were filed, contrasting with 1,766 cases in the same period of the preceding year, as reported by Epiq.

Moreover, individual Chapter 13 filings also experienced a notable upswing of 23% over the same time frame.

In a breakdown of the data, it was observed that bankruptcy filings for small businesses, falling under the Subchapter V elections within Chapter 11, exhibited a 55% increase.