U.S. sees fewest bankruptcies since 1986

U.S. bankruptcy filings hit their lowest level since 1986 last year thanks to unprecedented fiscal and monetary support from the Fed and Congress.

By the numbers: Total bankruptcy filings for the year fell to 529,068 filings across all chapters, while total filings in the month of December was 34,304, the lowest monthly total since January 2006, according to a release from legal services company Epiq AACER. The number of total 2020 filings was about 1/3 of the number seen in 2010.

What they're saying: “New bankruptcy filings continue to slide into record territory as the global pandemic spurs regulatory intervention to keep U.S. consumers and businesses afloat,” Chris Kruse, senior vice president of Epiq AACER, said in a statement.

• "The second stimulus package totaling over $900 billion is getting capital into the market and delaying bankruptcy filings across the country.”

Between the lines: “The peak in Chapter 11 filings for Q2 and Q3 is due to preexisting distressed companies coupled with the onset of a zero-revenue environment. The federal backstop proved a vital lifeline for the stabilization of corporations to protect the US economy,” said Deirdre O’Connor, managing director of corporate restructuring at Epiq.

• “This federal intervention created record breaking capital deployment fueled by investors chasing yield as companies attempt to ride out this storm.”
• Chapter 11 filings, which are primarily used to reorganize larger businesses, jumped 29% in 2020 to 7,128, compared to 5,158 in 2019.

Go deeper: Government interventions are masking a growing corporate insolvency crisis