Tag: Bankruptcy

In the 12-month period ending in June, bankruptcy filings rose 12.2%, according to U.S. Courts. This surge signals economic volatility and increases credit risk.

Nothing sparks more worry in a credit manager than a customer who suddenly begins slipping. When payments start coming later and later and communication becomes increasingly strained, it may be time for proactive measures to protect your company should they file for bankruptcy.

For credit managers juggling many responsibilities every day, keeping up with a customer’s ongoing bankruptcy proceedings can be time-consuming. With drawn-out proceedings and lengthy court documents, a customer’s bankruptcy can really weigh on credit managers trying to find the time to do it all.

Geopolitical uncertainty, rising inflation and higher borrowing costs have pushed some businesses to the brink and, in many cases, beyond it. Earlier this year in April, Epiq AACER recorded a 42% surge in Chapter 11 bankruptcy filings from the previous year. In a recent eNews poll, credit professionals noted both slight (35%) and significant (15%) increases in Chapter 11 bankruptcy filings.

The Uniform Law Commission (ULC) approved the Uniform Assignment for Benefit of Creditors Act (Uniform ABC Act) on Oct. 20, 2025. Christopher A. Ward, office managing partner, Wilmington, and a partner of Lowenstein Sandler’s Bankruptcy & Restructuring Department, was an observer of the ULC process.

For many credit professionals, bankruptcy can be one of the most stress-inducing business experiences. It is often a costly and lengthy process, testing a company’s financial resilience and the emotional bandwidth of everyone involved. Important deadlines arise quickly, notices are frequently sent by ordinary mail and failure to act on certain notices before deadlines can result in the loss of your company’s rights and claims.

Bankruptcy venue shopping, the practice of companies filing cases in jurisdictions they view as more favorable, has been part of the system for decades, often raising concerns among creditors about cost and participation in proceedings. Congresswoman Zoe Lofgren (D-California) has introduced legislation since 2018 to address this by requiring that Chapter 11 bankruptcy proceedings take place where the principal place of business or principal assets of the corporation are located. Despite bipartisan support for the legislation, it has failed to meaningfully advance each time.

No matter how sound your credit policy or how thorough your practice, bankruptcy can strike without warning. One day your customer is current and the next, they’ve filed. And when they do, the payments you worked hard to collect could be at risk of being clawed back through a preference claim. 

The threshold for Subchapter V bankruptcy could permanently rise under a new bill introduced by Virginia Congressman Ben Cline. The Bankruptcy Threshold Adjustment Act of 2026 would raise the threshold from $3 million to $7.5 million, effectively allowing more businesses to file via a faster, cost-effective route to bankruptcy.