6 Developments Behind Business Bankruptcies in 2026

The count of business bankruptcies rose by about a sixth in the year that ended June 30, 2026, and most of what an owner should take from 2026 sits beneath that figure. The courts report one set of numbers, a private data company reports another, and the rules that shape a filing, or an alternative to one, changed while both sets were being compiled.

Every number below carries its source and its period. Court data and private data measure different things, and adding them together produces a figure that describes nothing.

1. Business Filings Rose 16.9 Percent in the Year Ending June 30, 2026

The Administrative Office of the U.S. Courts reported on July 28, 2026 that business filings "rose 16.9 percent, from 23,043 to 26,941" in the twelve months ending June 30, 2026, compared with the twelve months ending June 30, 2025. Total filings, business and non-business together, rose 12.2 percent, from 542,529 to 608,511. Non-business filings rose 12 percent, to 581,570 from 519,486.

Business filings grew faster than the total, or, to be exact, faster in percentage terms, since 3,898 additional business cases is a small number beside 62,084 additional non-business ones. Business cases remain fewer than one in twenty of all filings.

The release traces the climb to a low point in June 2022, when the count stood at 380,634, and reports that filings have increased every quarter since. No figures for the twelve months ending September 30, 2026 had been published when this was written; the courts release those later in the year.

2. Chapter 11 Counted 10,320 Cases, a Figure That Needs a Caveat

In the same twelve months ending June 30, 2026, the courts counted 382,161 Chapter 7 cases, 10,320 Chapter 11 cases, 336 Chapter 12 cases, and 215,490 Chapter 13 cases.

The Chapter 11 number includes every Chapter 11 case, of every size and type, business and non-business. It is not a count of small businesses and not a count of Subchapter V elections. Some individuals file Chapter 11 as well, for reasons that need not be pursued here.

Chapter 7 is the larger number by far, and it includes business liquidations along with personal cases. The published counts do not record why any business filed, so they cannot say how many cases involved merchant cash advances, bank loans, or anything else in particular.

3. Subchapter V Elections Rose 63 Percent in August, by Epiq's Count

Epiq AACER, a private bankruptcy data provider, reported on September 4, 2026 that Subchapter V elections numbered 302 in August 2026 against 185 in August 2025, an increase of 63 percent, and were up 28 percent from 236 in July 2026. In the same comparison, commercial Chapter 11 filings were nearly flat at 623 against 618, and commercial filings of all chapters were 2,630 against 2,582.

Put the two Epiq figures side by side and the shift is plain. Set against commercial Chapter 11 filings, Subchapter V elections equaled nearly half of them in August 2026, against under a third a year before. The overall number of commercial Chapter 11 filings barely moved, so the change in composition did most of the work, and that is where a reader might expect the story of the year to be, except that one month is one month, and monthly figures can move for reasons unrelated to any trend, and a single release cannot say whether September will repeat it.

The story of 2026 is less about how many businesses filed than about which door they chose.

These are Epiq's categories, not the courts'. Epiq's "commercial" filings and the courts' "business" filings use different definitions and different periods, and neither should be added to or compared against the other.

4. The Subchapter V Ceiling Stayed at $3,424,000 While Congress Moved to Raise It

On June 21, 2024, the temporary $7.5 million debt limit for Subchapter V expired. Eligibility now runs through the small business debtor definition in Section 101(51D), whose figure has been $3,424,000 since April 1, 2025, measured in noncontingent, liquidated debts excluding debts owed to affiliates and insiders.

In 2026 Congress took up the Bankruptcy Threshold Adjustment Act, which passed the Senate as S. 3977 by unanimous consent on August 3, 2026 and the House as H.R. 7730 by voice vote on September 16, 2026, in separate bills that, as of late September 2026, had not been reconciled into a single enacted text or signed, and which press coverage describes as restoring a $7.5 million Subchapter V limit and a combined Chapter 13 limit of $2.75 million, figures that would matter to any business whose debts fall between the current ceiling and the proposed one but that do not govern any case filed today.

Whether the lower ceiling held filings down, or pushed some businesses into traditional Chapter 11, is not something the published counts can show. Any owner near the line should confirm the limit in force on the filing date with counsel.

5. Traditional Chapter 11 Became More Expensive at the Top on April 1, 2026

A new quarterly fee schedule from the U.S. Trustee Program took effect April 1, 2026, under the Bankruptcy Administration Improvement Act of 2025, and runs through December 31, 2030. The change fell on the top tier: quarters with disbursements from $1,000,000 to $27,777,722 now pay 0.9 percent instead of 0.8 percent, with a ceiling of $250,000 per quarter.

Subchapter V cases pay no quarterly fee. For a small company, the fee schedule is one more line in the comparison between Subchapter V and a traditional case.

6. SBA Refinancing of Merchant Cash Advances Opens Slightly on October 1, 2026

The SBA's lender rulebook for 7(a) loans, SOP 50 10 8, says through September 30, 2026 that "Merchant cash advances and factoring agreements are not eligible for refinancing." The version that takes effect October 1, 2026, SOP 50 10 8.1, keeps factoring ineligible but allows a sales-based repayment agreement, such as a merchant cash advance, to be refinanced if it has been converted to a term loan, has amortized for at least 24 months, and no new agreements have been added since the conversion. An agreement that is still active remains ineligible.

Both versions also require that debt being refinanced has been current for the last 12 months or the life of the loan, whichever is less. For a business already behind, the change does not help yet.

What the Counts Leave Out

Filing statistics record the cases that reached a courthouse and nothing about the obligations resolved before that point. An owner facing a judgment, a levy, or more creditors than any negotiation could reach needs a bankruptcy lawyer, and the 2026 counts show more owners reaching that conclusion than the year before.

An owner whose problem is concentrated in a few merchant cash advances may have a narrower option first. Delancey Street negotiates business debt with a focus on merchant cash advances. It is not a law firm and cannot file a case, so a business that needs one needs separate counsel; where legal work arises it works with licensed attorneys independent of it. Its first review is confidential and free.

A year's statistics describe a population. The decision in front of any one owner is made from a single balance sheet, and the balance sheet is the better guide.