It has not been since 1986 that so few Americans have filed for bankruptcy.
Legal services firm Epiq [1] recently released both its December 2020 and annual bankruptcy filing statistics from its bankruptcy information services business, AACER—it showed 2020 had the lowest number of bankruptcy filings since 1986 with a total of 529,068 filings across all chapters.
For December, the total new U.S. bankruptcy filings across all chapters totaled 34,304 for the month, the lowest monthly total since January 2006. The category that continues to grow year-over-year is commercial Chapter 11 filings, which were up 29% with 7,128 new filings in 2020 compared to 5,518 in 2019.
"The peak in Chapter 11 filings for Q2 and Q3 is due to preexisting distressed companies coupled with the onset of a zero-revenue environment. The federal backstop proved a vital lifeline for the stabilization of corporations to protect the US economy,” said Deirdre O’Connor, Managing Director of Corporate Restructuring at Epiq. “This federal intervention created record-breaking capital deployment fueled by investors chasing yield as companies attempt to ride out this storm.”
“New bankruptcy filings continue to slide into record territory as the global pandemic spurs regulatory intervention to keep U.S. consumers and businesses afloat,” said Chris Kruse, SVP of Epiq AACER. “The second stimulus package totaling over $900 billion [2] is getting capital into the market and delaying bankruptcy filings across the country.”
Non-commercial chapter 13 filings in December decreased 46% in 2020, at 147,144 filings, down from 272,420 filings for all of 2019.
Chapter 7 non-commercial filings were down 22% in 2020 with 348,428 new filings, down from 444,931 for the entire 2019.
"These two categories are a bellwether for the U.S. consumer market as they are a trailing economic indicator of the overall strength of a market where unemployment continues to ravage the country. We expect this category to grow substantially in the second half of 2021,” Kruse said.