Big Business Turns to Bankruptcy as Inflation and Debt Take Toll

The U.S. experienced a notable rise in large-company bankruptcies in 2025, reaching the highest level in 15 years with 446 filings recorded for the 12-month period ending June 30, 2025. This reflects a broader economic trend where businesses, particularly in sectors such as energy, retail, and healthcare, are grappling with financial distress due to persistent inflation, elevated interest rates, and mounting debt. The Southern District of Texas has been especially active, contributing significantly to the national trend with 1,252 business filings for the year ending December 31, 2024, one of the highest in the country [1]. These filings indicate that companies are increasingly turning to bankruptcy as a mechanism to navigate economic challenges and restructure their operations [2].

The rise in large-company bankruptcies is part of a broader upward trend in total bankruptcy filings across the U.S. For the 12-month period ending June 30, 2025, a total of 542,529 bankruptcy cases were recorded, reflecting an 11.5% year-over-year increase. Business filings accounted for 23,043 of these, a 4.5% increase compared to the previous year. The first half of 2025 saw an even sharper rise, with a 10% year-over-year increase in filings, driven primarily by a 15% surge in Chapter 7 filings for individuals [1]. Analysts attribute this trend to a combination of macroeconomic pressures, including inflation, high borrowing costs, and the resumption of student loan repayments, which have collectively placed strain on both personal and corporate financial health [3].

The Southern District of Texas, which includes Houston and other major commercial centers, continues to be a focal point for business bankruptcies. As one of the top five districts in the U.S. for such filings, it has seen a steady stream of cases from a variety of industries, including those particularly vulnerable to economic shifts like retail and energy. For instance, companies in the Southern District filed 1,252 business bankruptcy cases in the 12 months ending December 2024, illustrating the district’s role as a key venue for resolving corporate financial distress [1]. This pattern suggests that businesses in the region are increasingly seeking judicial intervention as a means of restructuring under challenging financial conditions.

While the overall increase in bankruptcies is significant, it remains below the historical peaks seen during the 2008 financial crisis. However, the upward trajectory of filings, especially among large businesses, points to a deepening economic strain in certain sectors. In the broader context, the U.S. economy is witnessing a shift in the balance between business and individual filings, with companies increasingly seeking bankruptcy protections as they face liquidity issues. This is particularly evident in industries where leverage and debt obligations have become difficult to sustain amid high interest rates and weak demand [1].

The data also highlights a growing trend in the conversion of court-supervised reorganization efforts into actual bankruptcies. In Brazil, for example, 30% of companies exiting reorganization in the second quarter of 2025 ultimately filed for bankruptcy, the highest ratio since the beginning of the Monitor RGF survey in April 2023. Although this data pertains to Brazil, it reflects a parallel global pattern where the high cost of borrowing is making restructuring less effective as a long-term solution. Experts note that as companies remain under court-supervised reorganization for extended periods, both market and judicial interest wane, making recovery increasingly unlikely [3].

In sum, the U.S. is experiencing a renewed surge in large-company bankruptcies, driven by macroeconomic pressures that are intensifying financial strain across multiple sectors. The Southern District of Texas, in particular, has become a central hub for corporate bankruptcies, underscoring the regional impact of national economic trends. While current levels have not yet reached the peaks of the 2008 crisis, the continued rise in filings suggests that more companies may seek bankruptcy as a path forward in the coming months. As high interest rates persist and inflationary pressures continue, the financial resilience of many businesses will remain under scrutiny [1].

Source: [1] title1 (https://www.uscourts.gov/data-news/judiciary-news/2025/07/31/bankruptcy-filings-rise-115-percent-over-previous-year?utm) [2] title2 (https://www.epiqglobal.com/en-us/resource-center/news/total-bankruptcy-filings-increased-10-percent-in-the-first-half-of-2025?utm) [3] title3 (https://www.congress.gov/crs_external_products/IN/PDF/IN12536/IN12536.2.pdf?utm)