Corporate Bankruptcies Stay Above Historical Norms Despite Declining from Recent Peak

Key Findings

• Mega bankruptcies continue at elevated levels. 28 companies with recorded assets exceeding $1 billion filed for bankruptcy during the period, exceeding the historical average of 23 annual filings.
• Shifts in consumer preferences are causing financial distress. 73% of Chapter 11 mega bankruptcies cited changing consumer behavior, competitive pressures, or declining demand as contributing factors.
• Regulatory and policy challenges intensified competitive pressure. 65% of mega bankruptcy filings cited regulatory, legislative, or trade policy pressures, including tariff-related impacts and industry-specific compliance requirements.
• Texas has overtaken Delaware as the leading bankruptcy venue. The Southern District of Texas accounted for 32% of large corporate bankruptcy filings, surpassing Delaware’s 20% share and Texas’s historical average of 13%.

Financial Distress Drivers

The report analyzes first-day declarations from 26 Chapter 11 mega bankruptcies and found that multiple operating and macroeconomic pressures continue to affect large companies.

Bankruptcy filers pointed to changing consumer preferences and competitive disruption, citing developments such as cord-cutting, competition from streaming platforms, and post-pandemic demand shifts. They also cited regulatory and policy challenges, including trade tariffs and healthcare funding changes.

High interest rates weighed on companies with floating-rate debt and refinancing needs.  Meanwhile, persistent inflation also remained a commonly cited headwind, affecting both input costs and customer purchasing power.

Sector Activity Remains Concentrated

Manufacturing, services, and finance, insurance, and real estate accounted for 64% of all large corporate bankruptcy filings during the period.

Manufacturing companies represented nearly one-third of all mega bankruptcies, with plastics and packaging businesses particularly affected by volatile demand and post-pandemic inventory adjustments. The services sector saw notable distress among healthcare providers, while finance, insurance, and real estate filings remained substantially above historical averages amid ongoing challenges in real estate markets.