Tag: Bankruptcy

As a credit manager, you are likely familiar with the sinking feeling you get after learning a customer has filed for bankruptcy. Whether they are aiming to reconstruct or liquidate their business entirely, customers filing for bankruptcies can send even the most experienced credit managers scrambling.  

Commercial Chapter 11 bankruptcy filings increased 20% year-over-year in March 2025. “The 20% rise in commercial Chapter 11 filings to 733, up from 611 last year, signals persistent economic pressure, mirrored by a 10% increase in total commercial filings to 2,727,” said Michael Hunter, Vice President of Epiq AACER.

Credit professionals across industries have a lot in common, from their deftness with numbers to their careful evaluations of risk factors. One shared frustration among credit managers is an unresponsive customer, whether it’s a customer who has suddenly gone radio silent or one you’ve spent weeks trying to get in touch with, only to be met with a voicemail.

For a B2B credit manager, the news that a customer has filed for bankruptcy can feel like a gut punch—especially the first time it happens. It’s a painful and unavoidable reminder of the unpredictability of business and the risks that come with extending credit.

In the four years since Congress amended the bankruptcy code to assist small business reorganizations, credit managers still have mixed opinions on the success of these filings.  

In a landmark 5-4 decision in Harrington v. Purdue Pharma that will significantly reshape corporate bankruptcy practice, the U.S. Supreme Court resolved a circuit split regarding the authority of a bankruptcy court to approve releases in favor of non-debtor entities without the consent of impacted third parties. Reversing the decision of the Second Circuit, the Supreme Court’s narrow majority held that such non-consensual releases—other than in the context of asbestos-related claims—are not authorized under the Bankruptcy Code. 

The “big” win: In a decision that helps balance Subchapter V’s pro-debtor provisions, the U.S. Court of Appeals for the Fifth Circuit recently held that the Bankruptcy Code’s exceptions to discharge apply to a corporate Subchapter V debtor with a nonconsensual plan (even though the exceptions do not apply to corporate debtors in “traditional” Chapter 11 cases).