Corporate bankruptcy filings across the United States have climbed sharply for two consecutive fiscal years, and the companies seeking court protection now span well beyond the retail sector that dominated earlier waves. Business petitions jumped 33% to 22,762 in fiscal year 2024, and the upward trend continued into fiscal year 2025, with business filings reaching 24,039 for the 12 months ending September 30, 2025. Airlines, industrial suppliers, and auto-parts manufacturers are now among the notable filers, suggesting that financial stress is reaching beyond the retail sector that dominated earlier waves.
From Retail Meltdowns to Industrial Collapses
For years, the bankruptcy beat was dominated by consumer-facing businesses. According to S&P data cited by one DealBook analysis, consumer discretionary companies, a category that includes retailers and restaurants, were the busiest filers when bankruptcies began climbing toward a decade-long high. Names like Bed Bath & Beyond and David’s Bridal defined that chapter, as overbuilt store footprints and e-commerce competition collided with higher borrowing costs. But the current cycle looks different. Spirit’s parent company and its debtor affiliates filed voluntary Chapter 11 petitions on August 29, 2025, and an SEC filing shows NYSE American had begun delisting proceedings by September 2. Weeks later, auto-parts supplier First Brands Group filed for Chapter 11 on September 28, 2025, and a court approved immediate access to the full $1.1 billion in debtor-in-possession financing to keep the company operating during restructuring.
These cases illustrate a pattern that raw government data confirms. The Administrative Office of the U.S. Courts reported that total bankruptcy petitions hit 504,112 in fiscal year 2024, with business petitions accounting for 22,762 of that total after a 33% year-over-year increase. By the 12 months ending September 30, 2025, business filings had risen another 5.6% to 24,039, and Chapter 11 filings alone reached 8,937 for that period. The acceleration is broad enough that it can no longer be explained by a single struggling industry. Airlines carry different cost structures than auto-parts makers, and both differ from the restaurant chains that filled earlier dockets. What they often share are heavy debt loads that became harder to service as interest rates stayed elevated and costs climbed, a pressure point regulators have also flagged in leveraged lending markets.
Leveraged Lending Fuels the Fire
A joint review by the FDIC, Federal Reserve Board, and Office of the Comptroller of the Currency helps explain why distress is spreading so widely. Their 2024 Shared National Credit Program report examined $6.5 trillion in large syndicated lending commitments across 6,699 borrowers. Leveraged loans made up nearly half of those commitments, and they accounted for 79% of non-pass loans, the category regulators use for credits rated below satisfactory. The report highlighted that criticized and classified commitments remain heavily concentrated in borrowers with high leverage and limited capacity to absorb shocks, particularly in sectors that borrowed aggressively during the era of ultra-low interest rates. As floating-rate debt repriced higher, many of those borrowers saw their interest expense jump faster than revenue, eroding coverage ratios and leaving little room to maneuver.
The strain is showing up in court dockets and in market data. Analysts at S&P Global Market Intelligence have tracked a surge in large corporate bankruptcies, a trend that a recent business report linked to the pileup of leveraged loans and speculative-grade bonds issued over the past decade. Many of those obligations are now maturing into a higher-rate environment, forcing companies either to refinance on tougher terms or to seek court protection. In cases like First Brands Group, debtor-in-possession facilities allow operations to continue during restructuring, but they also underscore how reliant distressed borrowers have become on fresh credit to bridge them through the process. For lenders and regulators alike, the challenge is to contain losses in this leveraged corner of the market before they spill over into the broader financial system.
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*This article was researched with the help of AI, with human editors creating the final content.
Grant Mercer covers market dynamics, business trends, and the economic forces driving growth across industries. His analysis connects macro movements with real-world implications for investors, entrepreneurs, and professionals. Through his work at The Daily Overview, Grant helps readers understand how markets function and where opportunities may emerge.
