ANALYSIS: Big Bankruptcy Cases on a Roll; Delaware Still Leads

2023 has continued to be a banner year for Chapter 11 bankruptcy megacases. In April, I reported that 2023’s megacase filings were already outpacing last year’s, and the momentum hasn’t abated. As of Aug. 31, there have been 120 megacases, not counting jointly administered affiliate cases.

To illustrate how busy this year has been compared with last year, I compared the number of megacases for H1 2022 to the number for H1 2023. Bloomberg Law’s Chapter 11 Petitions and Litigation Midyear 2022 Report identified 41 megacases (defined as nonindividual voluntary cases with more than $50 million in assets) for the first half of last year. There were 90 megacases in the first half of 2023—a nearly 220% increase over the first half of 2022.

May and August have been the busiest months of the year for megacases, each with 21 cases. April and July were the quietest months with only nine cases each, but were each followed by the year’s busiest months.

Debtors this year have frequently cited rising interest rates as a factor precipitating their bankruptcy filings. Fallout from the SPAC bubble burst, as well as distress in the healthcare and retail sectors have also contributed to these totals.

The Bankruptcy Court for the District of Delaware maintains a commanding lead as the venue of choice for megacases. Its 47 cases account for approximately 39% of the 120 megacase total through August of this year. The Bankruptcy Court for the Southern District of Texas is a distant but still strong second with 27 cases, followed by the Bankruptcy Court for the Southern District of New York with 10 cases.

The Bankruptcy Court for the District of New Jersey has recently gained notice as an emerging megacase magnet with several high profile cases like LTL Management, Bed Bath & Beyond, and David’s Bridal; however, it remains in fourth place with six cases.

2023 is shaping up to be one of the busiest years for bankruptcy professionals in quite some time.

Bloomberg Law subscribers can find related content on our Bankruptcy Practice Center and Chapter 11 resources.

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