The accelerated pace of large corporate bankruptcy filings continued in the last 12 months, as high interest rates, inflation, and other factors continued to take their toll. According to a new report from Cornerstone Research, the number of filings during the second half of 2023 and the first half of 2024 were more than 40% above the long-term annual averages. The report, which is entitled “Trends in Large Corporate Bankruptcies – Midyear 2024 Update,” can be found here. Cornerstone Research’s October 2, 2024, press release about the report can be found here.

The report focuses on what the report calls “large corporate bankruptcies” – that is, Chapter 7 and Chapter 11 bankruptcies filed by public companies and private companies with over $100 million in assets. The report is based on analysis of a database of 1,564 bankruptcies from January 1, 2005, through June 30, 2024.

According to the report, in the last 12 months, 113 companies with assets of over $100 million in assets filed for Chapter 7 or Chapter 11 bankruptcy, 8% above the 105 large corporate bankruptcies in the 12-month period of the second half of 2022 and the first half of 2023. The 113 total of large corporate bankruptcies is well above the annual average number of bankruptcies (79.2) between 2005 and 2023.

The 60 bankruptcy filings in the first half of 2024 were nearly 50% higher than the semiannual average between 2005 and 2023 of 39.6 filings, though the total of 60 filings in the first six months is well below the 89 bankruptcy filings in the first half of 2020 (at the outset of the pandemic) and the 106 filings in the first half of 2009, at the peak of the global financial crisis.

In the last 12 months, there were 24 mega bankruptcies (those filed by companies with over $1 billion in reported assets), below the 28 mega bankruptcies filed in the twelve month period of the second half of 2022 and the first half of 2023, but above the 2005-2023 annual average number of mega bankruptcies of 22.5. The largest bankruptcy in the last 12 months was filed by WeWork, Inc. ($15.1 billion in assets).

Large corporate bankruptcy filings increased across almost all industries in 2023 compared to 2022, most notably in Retail Trade, Services, and Manufacturing Industries.

Companies with the mega bankruptcy filings during the 12-month period of the second half of 2023 and the first half of 2024 most commonly noted these factors contributing to the bankruptcy: “(i) rising costs due to high inflation and interest rates; (ii) lingering impacts of COVID-19; (iii) increased competition for the company’s products or services; and (iv) unsuccessful strategic initiatives.” Rising costs due to high inflation and interest rates was identified by 88% of the mega bankruptcies. The lingering impact of COVID-19 was identified by 79% of the mega bankruptcies. Other factors mentioned by the mega bankruptcies included logistical and supply chain issues caused by the Russia-Ukraine war.

The four top venues for bankruptcy filings in the last 12 months were the District of Delaware; the Southern District of Texas; the District of New Jersey; and the Southern District of New York, which take collectively accounted for 76% of the large corporate bankruptcy filings in the last twelve months. Consistent with prior years, Delaware continued to be the most common venue for large bankruptcy filings, accounting for 44% of the filings in the last twelve months.