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Commercial Bankruptcies Rose at Slower Pace in August

Sept. 9, 2020, 10:16 PM

Commercial Chapter 11 bankruptcy filings rose about 17% year-over-year in August as businesses sought protections during the pandemic-driven economic downturn, according to new data.

“Smaller companies are not experiencing the same market dynamics to access liquidity and will consider seeking protection in a bankruptcy,” said Deirdre O’Connor, managing director of corporate restructuring at Epiq Systems Inc., a research firm that released the data. “We continue to see steady filings in retail, energy, entertainment, along with travel and leisure.”

But the 525 filings in August represent a nearly 18% decline from July, indicating that companies are still finding financing to stay in business. “The pace has slowed down significantly over July” O’Connor said. “Large corporations are benefiting from robust capital market activity which is providing access to capital at an attractive cost.”

August’s 17% year-over-year increase also trails the 28% increase for the whole of 2020 so far, the data showed.

But the dip could be temporary, said Fred Ringel, co-chair of the business finance and restructuring department at Robinson Brog Leinwand Greene Genovese & Gluck PC.

“August is always in my view a really terrible month for filings,” he said. “I see things picking up in September.”

Several factors, like the $2.2 trillion CARES Act, have kept troubled firms afloat this year. But the economic impact from the pandemic could push more companies and consumers into bankruptcy.

“With the expiration of government stabilization programs, elevated unemployment levels and growing economic uncertainty, we anticipate a dramatic climb in filings later this year,” American Bankruptcy Institute executive director Amy Quackenboss said in a statement Tuesday.

A wave of new bankruptcies may not come right away, especially if the federal government passes another stimulus package soon, said Christopher Ward, the bankruptcy and financial restructuring practice chair at Polsinelli PC.

But the wave is inevitably coming, he said. “Nobody wants to be that first lender that forecloses on a borrower.”

Epiq’s report also shows that non-commercial bankruptcies in August declined by 8% since July and fell by 42% compared to the same month last year.

“We continue to see delays in filings as government and bank programs provide short-term liquidity relief to consumers,” Chris Kruse, Epiq senior vice president, said in a statement. “However, there is a backlog developing as unemployment rates continue to stay high, likely triggering more bankruptcy filings in Q4-2020.”

To contact the reporter on this story: Alex Wolf in New York at

To contact the editors responsible for this story: Laura D. Francis at, Roger Yu at