371 Corp Bankruptcies Hit Decade High

Bankruptcy filings increased 11.5% in the twelve months ending June 30, 2025, totaling 542,529 cases. This reverses a decade-long decline that ended in June 2022.

Corporate Bankruptcy Data:

• 371 corporate filings in H1 2025, highest since 2010

• 63 new corporate filings in June 2025 (vs. 64 in May)

• Monthly pace continues at post-recession highs

Private Equity Concentration:

• 6 of 14 largest bankruptcies (>$1B liabilities) in Q2 2025 were PE-backed

• PE companies represented 54% of large bankruptcies in 2024 despite 11% of total filings

• Notable Q2 2025 PE-backed filings:

  • Marelli (KKR): Second restructuring in three years, cited tariffs and liquidity

  • Everstream Solutions (AMP Capital): >$1B debt, 21x debt-to-earnings ratio

  • CareerBuilder/Monster JV (Apollo): $400M debt

Geographic Distribution (12-month % increase):

• Rhode Island: +27.6%

• Florida: +23.5%

• Minnesota: +21.0%

• Only declines: South Dakota, Alaska, Delaware

Sector Breakdown:

• Industrial and Consumer Discretionary: 107 filings in June (nearly 50% of classified filings)

• Solar energy sector notably affected by regulatory changes

Economic Context:

• Federal Reserve maintaining high interest rates through summer 2025

• Corporate debt levels rising while liquidity deteriorates

• Personal bankruptcy inquiries at highest post-pandemic levels (Q1 2025)

• Foreclosure inquiries highest since November 2020

Current vs. Historical:

• 2025 filings remain below 2010 peak of 1.6 million

• Consistent quarterly increases since June 2022

• Trend acceleration visible across both business and personal filings

_{Soures: Private equity-backed bankruptcies continue in Q2 2025, United States Courts, American Bankruptcy Institute, S&P Global Market Intelligence}

Critical Signal for Alternative Lenders and Institutional Executives

The U.S. economy is facing increased financial distress with bankruptcy filings rising sharply, putting 2025 on track for the highest corporate insolvencies in over a decade. This trend requires immediate attention from business lenders and executives to adjust their risk assessments and strategies for a volatile environment.

• A Critical Inflection Point: For institutional lenders, the steady increase in filings since June 2022 signals an important change in economic stability, making it necessary to update risk management strategies.

• Beyond Historical Lows: Although the current numbers are much lower than the 1.6 million filings seen in September 2010, the clear increase shows growing financial pressures. This means it's important to quickly review and adjust investment strategies and credit evaluation methods to avoid big losses.

• Systemic Strain: The increase in both business and non-business filings suggests widespread economic challenges. Alternative lenders need to be more careful, paying close attention to whether borrowers can repay loans and maintain steady cash flow, especially as economic difficulties persist.

Corporate Distress Reaches Post-Recession Highs 

• Proactive Portfolio Management: The rising corporate bankruptcy rate in H1 2025 forces institutional lenders to reassess their exposure to vulnerable sectors and prepare for more restructuring, as worsening corporate liquidity and rising debt levels persist.

• Beyond Traditional Metrics: The constant number of corporate filings shows ongoing pressure in the system. Lenders need to improve their early warning systems by including detailed operational and market indicators, not just traditional financial ratios, to spot problems early.

• Navigating Interest Rate Impacts: The challenging environment is exacerbated by rising corporate debt levels and the U.S. Federal Reserve's stance to hold benchmark interest rates steady through the summer. This directly impacts debt servicing capabilities, reinforcing the imperative for alternative lenders to offer flexible and responsive financing solutions that can bridge liquidity gaps for fundamentally viable businesses facing short-term cash flow challenges.

Private Equity's Disproportionate Role in Large Bankruptcies 

• Enhanced Due Diligence on PE-Backed Entities: This alarming concentration demands that institutional lenders scrutinize the capital structures and operational sustainability of PE-backed entities with unprecedented rigor. The struggle of many PE firms to exit investments through sales or IPOs is prolonging distressed conditions for companies under their ownership.

• The LBO Leverage Trap: A critical driver of this instability is the widespread use of leveraged buyouts (LBOs), which saddle acquired companies with substantial debt. This aggressive financing drains resources that could otherwise be invested in innovation, workforce development, or market adaptation, creating inherently fragile entities that alternative lenders must thoroughly de-risk before engagement.

• Monitoring Distressed Exchanges: Lenders must expand their surveillance beyond formal bankruptcy filings to include "distressed exchanges." These out-of-court restructurings, though not technically bankruptcies, often lead to similar adverse outcomes for creditors. Examples like Wellness Pet and Nexeo Plastics completing such exchanges highlight a hidden layer of financial distress within PE portfolios.

• Case Studies in Risk: Notable PE-backed filings in Q2 2025 include Marelli (KKR-owned, citing tariffs and liquidity issues in its second restructuring in three years) and Everstream Solutions (AMP Capital-owned, with over $1 billion in debt and a staggering 21x debt-to-earnings as of December 2024). The joint venture between CareerBuilder and Monster (Apollo Global Management) also filed for bankruptcy in June with nearly $400 million in debt. These cases underscore the heightened risk profile of certain PE-backed ventures, necessitating more stringent covenants and aggressive performance monitoring from lenders.

Macroeconomic Headwinds as Key Drivers The economic environment continues to challenge both businesses and consumers. Corporate liquidity has largely worsened due to rising debt levels and the Federal Reserve's sustained high interest rates. Consumer spending is straining under a cooling job market, inflation that remains above monetary policymakers' targets, and the emerging impacts of Trump administration tariffs.

• Dynamic Risk Assessments Required: Ongoing economic challenges are making financial stability worse in various sectors, like consumer goods and industrials. Lenders need to use flexible risk assessments that consider changing economic signs, allowing them to quickly adjust their portfolios and manage risks effectively.

• Consumer Stress as a Precursor: Data from LegalShield indicates a surge in personal bankruptcy inquiries to their highest post-pandemic levels in Q1 2025, with foreclosure inquiries also reaching their highest rate since November 2020. This rising consumer stress is a direct precursor to broader economic instability, inevitably translating to heightened credit risk for consumer-facing businesses and small enterprises reliant on robust consumer spending.

• Translating Macro to Micro: High-profile bankruptcies provide tangible evidence of these macroeconomic forces at play. Sunnova Energy International Inc., a solar energy services provider, cited its focus on growth over debt service, coupled with rising interest rates and legislative changes, as contributors to its bankruptcy. Similarly, Marelli Automotive Lighting USA LLC credited macroeconomic challenges and the removal of tax credits for residential solar as key business hurdles. These real-world examples underscore the urgency for lenders to integrate comprehensive scenario planning for regulatory and market shifts into their lending models.

Geographic and Sectoral Hotspots Emerge 

• Localized Risk Appetites: The significant state-level variance in bankruptcy surges indicates that localized economic conditions and specific industry concentrations are increasingly critical factors. Alternative lenders must adopt a granular, state-by-state risk appetite and outreach strategy rather than a generalized national approach.

• Targeted Opportunity in Distress: The consistent dominance of Industrial and Consumer Discretionary sectors in corporate filings pinpoints specific industry verticals where alternative lenders can anticipate elevated distress. This also presents strategic opportunities for specialized lending, albeit with appropriately adjusted risk premiums, to support restructuring and recovery in these segments.

• Benchmarking Resilience: While most states saw increases, only South Dakota, Alaska, and Delaware experienced a decline in filings. Analyzing the factors contributing to resilience in these states can provide valuable insights for lenders seeking to identify and support businesses in more stable economic environments or to apply best practices for strengthening portfolio companies in higher-risk regions.

Current bankruptcy trends highlight a challenging lending environment. For alternative business lenders and institutional executives, vigilance, data-driven adaptability, and strategic positioning are essential for success in this evolving economic climate.

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