Small Business Bankruptcies Surge 91% in February 2026
Event summary
- Subchapter V elections within Chapter 11 increased 91% in February 2026 to 314 filings, up from 164 in February 2025.
- Commercial Chapter 11 bankruptcy filings rose 67% to 814 in February 2026, driven by several large proceedings.
- Total bankruptcy filings increased 14% to 45,891 in February 2026, with individual bankruptcies up 13% to 43,225.
- Subchapter V filings have grown for eight consecutive months amid economic challenges and geopolitical uncertainty.
The big picture
The surge in Subchapter V elections reflects the growing financial strain on small businesses due to higher borrowing costs, softening demand, and tighter lending standards. This trend is part of a broader increase in bankruptcy filings, driven by the expiration of Covid-era support programs and rising household debt delinquencies. The data underscores the challenging economic environment for both small businesses and individuals, with implications for lenders, investors, and policymakers.
What we're watching
- Economic Pressures
- How sustained high interest rates and tightening credit will affect small business filings.
- Geopolitical Uncertainty
- Whether ongoing geopolitical tensions will further exacerbate bankruptcy trends.
- Subchapter V Utilization
- The pace at which small businesses will continue to leverage Subchapter V for restructuring.
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