Chapter 11 Bankruptcy Filings Surge 42%: How A/R Can Get More From Cash-Strapped Vendors

It might be time for A/R or your credit and collections arm to roll up their sleeves.

Staying ahead of the surge in Chapter 11 Bankruptcy filings can increase your odds of getting at least partial payment from cash-strapped debtors.

And the number of those debtors is increasing.

Bankruptcy Filings Surge

The number of commercial Chapter 11 bankruptcy filings this April (644) increased 42% from the 454 filed in April 2025, according to data from Epiq, which provides bankruptcy filing data.

Overall commercial filings — from Chapters 7 to 15 — climbed 21% to 3,060 compared to 2,520 filings the same time last year.

Small businesses suffered as much as the larger businesses: Chapter 11 filings containing subchapter V elections — the simpler and less costly option for restructuring debts — jumped to 301 from 206, a 46% increase.

“Rising inflation, higher borrowing costs, and geopolitical uncertainty are intensifying the financial strain on families and businesses,” says Amy Quackenboss, Executive Director at American Bankruptcy Institute. “[We] appreciate the momentum building in Congress to permanently expand access for both distressed small businesses looking to restructure under Subchapter V and for consumers looking to file for Chapter 13.” 

That legislation is in the hands of a congressional decision and is meant to increase the debt eligibility limit to $7.5 million for small businesses that need to restructure under the streamlined process of Subchapter V. It would also raise the debt limit for individual Chapter 13 filings to $2.75 million, while removing the distinction between secured and unsecured debt for that calculation.

High Profile Filing Overshadows the Real Numbers

Spirit Airlines caught broad attention when it abruptly shut down, following a failed $3.8 billion merger with JetBlue, a failed attempt to secure a $500 million federal bailout and two previous bankruptcy filings.

While it might have been one of the biggest and most publicized bankruptcies this year, it’s just one in the 56,000+ businesses and individual filings, a 14% YoY increase.

The vast majority were individual — 53,367 — but that likely doesn’t make collection efforts any easier for the finance team.

Tips to Collect Before a Chapter 11 Filing

This likely puts collections teams under some added pressure to keep after delinquent accounts and press for payments, even if only partial ones. Once a business is behind on a handful of bills and is leaning heavily toward filing for Chapter 11, your likelihood of obtaining payment drops.

But it’s not completely lost.

In fact, a business owner may be more likely to pay a partial amount to a loyal vendor despite its economic woes. And the squeaky wheel — perhaps a persistent accounts receivable or credit & collections pro — is more likely to get the grease.

For your A/R and C&C pros, here’s a reminder on proven techniques that can lead to success with late payers.

Tip 1: Make the email or phone conversation about the reason for a late payment to break the ice. For example, ask “What happened that’s keeping you from paying this invoice now?” instead of “Why aren’t you paying the invoice?” for a less accusatory tone.

Tip 2: Start and stay specific. Your emails about collections will be more successful if you include invoice numbers in the subject line. From there, ensure you have the name of your recipient exactly right. Finally, avoid words such as “money,” “price,” check” and “act now” to stay out of the spam folder.

Let’s say the worst happens and a customer declares bankruptcy. Courts depend on creditor committees to reorganize companies, in part to see that worthy creditors receive some payment. The trustees who form these committees often accept creditors owed money by the business filing for Chapter 11 — and not just the biggest creditors. So being kind and judicious in your dealings helps.