Small-Business Bankruptcies Are Climbing Fast

November 2026

Distress is concentrating in smaller companies, and the filing numbers now show it plainly. Subchapter V elections — the streamlined reorganization path for small businesses — totaled 2,442 in the first nine months of 2026, up 46% from 1,672 in the same period of 2025, according to Epiq AACER data reported by the American Bankruptcy Institute and tracked in Newpoint Advisors' Distressed Business Index. September alone saw 276 elections, up 38% year over year, and commercial Chapter 11 filings overall rose 11% to 6,560.

The surrounding credit signals point the same way. Fitch's U.S. private credit default rate reached a record 6.3% for the twelve months ended August 2026, with industrial and manufacturing defaults and healthcare provider defaults each at 9.9%. Newpoint flags construction, healthcare, retail, wholesale trade, manufacturing, and transportation among the industries where lower-middle-market stress is most elevated — while aggregate bank metrics, by contrast, remain comparatively calm.

For creditors and claim holders, a rising volume of smaller cases changes the practical work: more numerous, smaller claims, thinner estates, and recoveries that turn on speed and paperwork rather than on headline asset values. Positions in small cases reward holders who file accurately, watch bar dates, and price in administrative costs from the start.

Sources: Newpoint Advisors — Distressed Business Index — https://newpointadvisors.us/distressed-business-index/distressed-business-index-oct/