2025 Bankruptcy Roundup: Rising Filings and Evolving Dynamics

Bankruptcy activity across the United States increased noticeably in 2025, marking one of the sharpest rises in more than a decade and reflecting mounting financial pressure on businesses and individuals alike. While the total number of annual bankruptcy filings remains lower than pre-pandemic levels, overall filings grew at a steady pace compared to the prior year. In fact, 2025 was among the most active periods for business filings since the aftermath of the Great Recession with tens of thousands of business filers seeking protection under Chapter 7 or Chapter 11. [1] The number of filings in 2025 marks a clear increase from 2024 and underscores the challenges that companies face in managing debt and cash flow in the current market environment dominated by high inflation, interest rates, and trade policy uncertainty. [2] 

The uptick in cases includes headline filings across diverse sectors: 

• Aviation saw notable exits like Jet It, which ceased operations and filed under Chapter 7, while legacy carriers such as Spirit Airlines, a “Chapter 22” case, undertook a second round of reorganization efforts a mere six months after emerging from its first restructuring effort. 

• Rite Aid entered Chapter 11 a second time, ultimately closing most of its locations after facing opioid litigation, high debt, and revenue declines. 

• Household names like Forever 21, Claire’s, and Joann sought bankruptcy protection (again) in Chapter 22 cases amid slumping sales and high debt loads. 

• Significant industrial and service firms faced distress as demonstrated by United Site Services, the largest U.S. portable sanitation provider, filing bankruptcy to eliminate roughly $2.4 billion in debt. 

• Energy and manufacturing were not immune: solar supplier Sunnova Energy and hydrogen truck maker Nikola both pursued bankruptcy processes amid competitive and cost pressures. 

• Notable healthcare filers include Genesis Healthcare, once the largest skilled nursing operator in the United States, and California-based hospital operator Prospect Medical Holdings.

A combination of underlying pressures contributed to the rise in filings. Persistent high interest rates increased debt servicing costs at the same time evolving tariff policies raised expenses and disrupted supply chains, especially for industrial firms reliant on imported components. Retailers and consumer brands were vulnerable as weaker demand and rising operating costs eroded margins, while healthcare and senior living providers faced costly capital expenditures, rising labor costs, and government funding cuts. Meanwhile, consistent inflation and cautious consumer spending reduced revenue growth across industries.

Private equity was a visible feature in many corporate bankruptcies leading into and during 2025. Firms with private equity ownership often carry higher leverage from acquisition financing, which can reduce flexibility in a high-interest rate environment — a factor that has influenced bankruptcy outcomes in sectors such as retail and healthcare. While there were fewer bankruptcy filings by companies backed by private equity and venture capital this year than last, private equity in distressed transactions continues to dominate headlines. [3] The decrease in filings may be the result of the rise of private credit as a liquidity source for distressed companies or the utilization of out-of-court restructuring alternatives, such as liability management exercises — another topic that dominated restructuring headlines in 2025.

In addition, we saw a shift in regional patterns for bankruptcy filings. The Northern District of Texas was the court of choice for mega debtors including, among others, Genesis Healthcare and Hooters of America, replacing traditional hubs such as the Southern District of New York and becoming the third-most active court for large business filings for the first time since 2012. [4] 

2025 underscores how economic uncertainty and structural pressures continue to drive corporate filings. As we welcome 2026, these patterns will remain important indicators for policymakers, lenders, and businesses seeking to manage financial risk in an uncertain landscape. The uncertainty, combined with the increasingly litigious posture of many restructurings, presents complexities requiring greater expertise. 

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