The party’s over for hundreds of US companies as bankruptcy filings reached levels not seen since the aftermath of the 2008 financial crisis. A punishing combination of elevated interest rates and weakened consumer spending pushed 686 businesses into bankruptcy protection during 2024, marking an 8% jump from the previous year. The wave of corporate failures has left a trail of familiar names in its wake, from Party City’s second bankruptcy filing to the collapse of iconic brands like Tupperware and Red Lobster.

• Recovery rates for priority lenders hit their lowest levels since 2016, with out-of-court maneuvers to avoid bankruptcy occurring at twice the rate of actual filings, according to Fitch Ratings.
• The contrast is stark compared to 2021-2022 when only 777 companies filed for bankruptcy across both years combined — a period marked by ultra-low interest rates and robust consumer spending.

Hope flickers, risks remain: While the Federal Reserve’s pivot toward rate cuts offers a glimmer of hope, economists remain cautious. EY’s Gregory Daco notes, “The persistently elevated cost of goods and services is weighing on consumer demands,” adding that the burden is particularly heavy for lower-income families. At least 30 companies that filed last year carried liabilities exceeding $1B, suggesting the pressure isn’t limited to smaller enterprises struggling to stay afloat.