Corporate Bankruptcy Wave Turns to Dust, Defying Expectations

An anticipated surge of pandemic-induced Chapter 11 cases failed to materialize in 2021, thwarting corporate restructuring professionals’ predictions.

Government stimulus programs, combined with low borrowing rates and greater debt forbearance, disrupted early forecasts that a wave of corporate bankruptcies would wash over at some point during the year.

Instead, 2021 saw the fewest annual bankruptcy filings in nearly four decades, falling 24% from 2020, which had recorded the fewest bankruptcies since 1986. A total of 3,596 Chapter 11 cases were filed in 2021, about 3,000 fewer than the year before.

Some sectors, such as retail and health care remain vulnerable ...