Bankruptcy filings rose 11.9% last year, with business filings increasing 11.4%. That increase means more businesses are contending with financially troubled customers, vendors, partners, or other parties.
Filing levels remain well below the historic peak experienced during the Great Recession, but they have increased steadily since reaching a low point in 2022. That should put businesses on alert for risks within their commercial relationships and focus them on the need for proactive financial and legal planning.
For the 12-month period ending March 31, 2026, total filings increased from 529,080 cases to 591,850. The trend highlights the continuing financial pressures many organizations face, including elevated borrowing costs, persistent inflationary effects, tighter access to capital, labor challenges, and changing market conditions.
While an increase in bankruptcy filings does not necessarily signal widespread economic distress, it serves as a timely reminder that businesses should regularly assess their financial position and legal exposure. Waiting until liquidity concerns become acute can significantly reduce the strategic options available.
A filing by a customer, vendor, or partner can create immediate pressure on cash flow, revenue, and operations. Bankruptcies can leave businesses with unpaid invoices, lost sales, and interrupted supply or service relationships.
To stay ahead of potential issues, businesses can:
Early planning often provides businesses with greater flexibility to restructure obligations, negotiate with creditors, preserve enterprise value, and, in some circumstances, avoid more formal insolvency proceedings.
Joseph Butler is an experienced bankruptcy and insolvency attorney who represents individual and business debtors and creditors in cases under Chapters 7, 11, and 13. He has served as a Chapter 7 trustee for the U.S. Bankruptcy Court for the District of Massachusetts since 1987 and has also served as a Chapter 11 trustee in Massachusetts and Rhode Island.
At Lipresti Law, P.C., we regularly advise business owners on navigating financial challenges before they become legal crises. Whether through strategic planning, contract negotiations, debt restructuring, or business transactions, proactive legal counsel can help position a company for long-term stability, even during periods of economic uncertainty.