Authored by Naveen Athrappully via The Epoch Times,
There were 644 commercial Chapter 11 bankruptcy filings in April 2026, a 42 percent yearly increase, according to a May 6 statement from the American Bankruptcy Institute (ABI).
A Chapter 11 bankruptcy seeks to reorganize a company’s debts, with the aim of keeping the business operational and, eventually, becoming solvent. This is the most common type of bankruptcy filing made by businesses.
Within the 644 commercial Chapter 11 filings last month, 301 were made by small businesses, up 46 percent year over year, ABI said.
Overall commercial filings, including Chapter 11 and other types of bankruptcies, rose 21 percent during this period to 3,060 filings this April.
Chapter 12 filings, which concern family farms and fisheries, surged 130 percent to 62 in April 2026, the highest monthly total since February 2020, according to the institute.
“Rising inflation, higher borrowing costs, and geopolitical uncertainty are intensifying the financial strain on families and businesses,”ABI Executive Director Amy Quackenboss said.
ABI “appreciates the momentum building in Congress to permanently expand access” for distressed small businesses looking to file bankruptcies for restructuring under Chapter 11, she said, referring to the Bankruptcy Threshold Adjustment Act of 2026.
The Act, introduced in March, seeks to permanently raise the small-business Chapter 11 bankruptcy debt threshold to $7.5 million, according to a March 5 statement from Rep. Ben Cline’s (R-Va.) office. The threshold is the maximum debt limit a small business owner can have while applying for such bankruptcy.
The higher limit will allow more small businesses to access a “faster, more cost-effective bankruptcy process” while they negotiate with creditors.
Source: ZeroHedge News
