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Bidenomics: business bankruptcy filings up 105% in May

"Rising interest rates, inflation and high borrowing costs" are some of the reasons for the increase in bankruptcy filings, said Amy Quackenboss, executive director of the American Bankruptcy Institute.

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Verónica Silveri Pazos

Commercial bankruptcy filings, under Chapter 11 of the Bankruptcy Act, increased by 105% in May 2023 (680 filings), compared to the same month in 2022 (332). According to data provided by Epiq Bankruptcy, almost half of these filings were made by corporate subsidiaries.

Bed Bath & Beyond, SVB Financial Group, Envision Healthcare Corp and Lordstown Motors were among the large companies that fell victim to the economic crisis. American Bankruptcy Institute (ABI) Executive Director Amy Quackenboss explained some of the reasons why companies decide to file for bankruptcy:

Rising interest rates, inflation and high borrowing costs can present a daunting economic challenge to struggling families and businesses (...) Amidst these sustained economic pressures, bankruptcy provides financially distressed businesses and households with access to an escape valve.

Bankruptcy filings increase over 2022

In a matter of a year, the increase was devastating: "A total of 2,973 Chapter 11 business bankruptcies were filed in the first six months of 2023 compared to 1,766 in the same period last year," the report stated.

Bankruptcy filings by small businesses under Subchapter V of Chapter 11 also increased, although at a lower rate (31%) from 114 in May of last year to 149 this year.

Likewise, individual bankruptcy filings increased by 23% (from 29,559 in May 2022 to 36,345 this year). Of these, those under Chapter 13 increased by 25% (to 14,644). Filings under Chapter 7 increased by 22% (to 21,625) compared to May 2022.

President promotes "Bidenomics"

This data was released just days after the president touted "Bidenomics," a term he used in a speech to claim that his economic policies are headed in the right direction.

The White House also promoted Bidenomics by including among the administration's economic achievements: "job growth, low unemployment and a major infrastructure plan." However, Epiq Bankruptcy's Vice President of Business Development and Revenue, Gregg Morin, found, based on the report, that Biden's financial policies have not necessarily had a positive effect on U.S. companies:

We have been diligently monitoring the ongoing trend of monthly new filings versus closed cases and it serves as another indicator of the direction of the bankruptcy market (...) After 35 consecutive months (April 2020 - February 2023) of more closed cases than new filings each month, the market had two consecutive months (March and April) of more new filings than closed cases.
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