Chapter 11 bankruptcy filings in the first three quarters of 2020 have totaled 5,529, according to Epiq's latest bankruptcy filing report. By comparison, filings for 2019 had totaled 5,519, the data showed.
In September alone there were 747 new filings, a sharp increase of about 78% from the same period a year ago, according to the report.
The figures indicate that more owners are contemplating the possibility of bankruptcy despite the billions of dollars in coronavirus relief targeted at small businesses this year by the federal government.
The funds, offered through the Paycheck Protection Program, did not keep some from ending up in bankruptcy court.
Deirdre O’Connor, managing director of corporate restructuring at Epiq, said the filings are "primarily small businesses that do not have access to capital or stimulus."
Experts further predict that theses bankruptcies will continue to rise given "the current economic environment" and that "the most over-leveraged distressed companies could succumb to a formal restructuring due to lack of credit support and overall sector decline.”
On the other hand, the firm noted that noncommercial bankruptcy filings have declined since the onset of the pandemic.
Experts say this decrease is largely in part due to stimulus programs.
“Regulatory programs have effectively kicked the can down the street by injecting liquidity into the market, delaying new bankruptcy filings," said Chris Kruse, senior vice president of Epiq AACER.
In 2020, Chapter 13 noncommercial filings are down 43%, with 118,306 filings. The same period last year saw about 206,933 filings.
Meanwhile, Chapter 7 noncommercial filings are down 23% in September with 27,027 new filings.
The Associated Press contributed to this report.