Bankruptcy filings increased across the board in the first six months of the year, but the rise in small business filings stood out.
Subchapter V bankruptcies (a special type of Chapter 11 filing for small businesses that the Small Business Reorganization Act created in 2019) increased 50% year-over-year in the first half, according to the American Bankruptcy Institute (ABI) and bankruptcy data provider Epiq AACER. Subchapter V filings increased 28% year-over-year in June alone.
Total bankruptcy filings grew by 12% compared to the first half of 2025, up to 310,550. Commercial filings rose 13%, to 17,825, and commercial chapter 11 filings rose 28%, to 4,589, according to the data.
“The increase in bankruptcy filings over the past year, particularly among small businesses, reflects the continued financial pressures facing households and employers,” said Amy Quackenboss, executive director of ABI, in a press release. “Higher borrowing costs, rising expenses and geopolitical volatility are leading more debtors to turn to the bankruptcy system to restructure their obligations and seek a fresh financial start.”
Subchapter V currently limits eligibility to $3.4 million. Legislation introduced in the Senate would increase that figure to $7.5 million, a temporary increase in the threshold established by the CARES Act in 2020. The Bankruptcy Threshold Adjustment Act of 2026 would restore that limit, which expired in June 2024.
The increase in subchapter V small business filings “underscores the growing challenges small businesses face amid higher borrowing costs and weakened demand,” Michael Hunter, vice president of Epiq AACER, said in the release.
This is just the latest sign that many small businesses aren’t feeling so good right now. As CFO Brew reported Last month, small businesses “were more pessimistic in May and maintained historically high feelings of uncertainty,” according to the latest Small Business Economic Trends report from the National Federation of Independent Business.
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