Business Bankruptcies in US Reach Highest Level Since 2010

Corporate bankruptcies in the U.S. have reportedly reached their highest level in 14 years.

High interest rates and waning consumer demand helped drive at least 686 companies to bankruptcy in 2024, the Financial Times reported Tuesday (Jan. 7), citing S&P Global Market Intelligence data.

That’s an 8% increase from 2023, the report said, and the highest number of bankruptcies since the 828 filings recorded in 2010.

Last year also saw an uptick in what the FT describes as “out-of-court maneuvers” designed to prevent bankruptcies, which outnumbered bankruptcies by two to one. That means that priority lenders to issuers with at least $100 million in aggregate debt saw the lowest recovery rates in at least eight years, the report said.

The FT points to the recent collapse of Party City as emblematic of last year’s corporate bankruptcy. The party supply retailer last month submitted its second bankruptcy filing in as many years, after emerging from Chapter 11 proceedings in the fall of 2023.

Party City announced it would shutter its 700 stores after struggling “in an immensely challenging environment driven by inflationary pressures on costs and consumer spending, among other factors.”

Other high profile bankruptcies last year included Tupperware, Red Lobster, Avon and Spirit Airlines, all coming as consumer demand weakened in the U.S.

“The persistently elevated cost of goods and services is weighing on consumer demands,” said Gregory Daco, chief economist at EY.

The pressure is especially heavy for lower-income families, he added, “but even in the middle and on the higher end, you’re seeing more caution.”

And there are signs that consumers may not increase their spending heading into the new year. As covered here last month, the Conference Board’s Consumer Confidence Index showed a 12.6-point drop in the Expectations Index, a gauge of consumers’ short-term outlook for income, business and labor market conditions.

A growing number of those surveyed said their views were colored by politics and tariffs, with 46% saying they expected tariffs to increase the cost of living.

At the same time, the December edition of the PYMNTS Intelligence report “New Reality Check: The Paycheck-to-Paycheck Report” found more optimism among workers.

The report found that more than a third of workers believe they have better opportunities for career advancement now than in recent years. However, the research also showed that workers who live paycheck to paycheck were less likely to feel that optimism.