US corporate bankruptcies hit their highest level since the 2008 financial crisis – as Americans tighten their belts.

Companies have also incresingly been grappling with high rising debts – driven by  high interest rates that caused borrowing costs to spike.  

In 2024, a total of 686 companies filed for bankruptcy, showing an increase of 8 percent compared to the previous year, 2023. This number is significantly higher than the combined total of filings in both 2021 and 2022. It is reported to be the highest number of filings since 2010, as indicated by data from S&P Global Market Intelligence.

Furthermore, in the same year, there was a noticeable rise in companies attempting to steer clear of bankruptcy by opting for out-of-court solutions. These preventative measures outnumbered the actual instances of bankruptcy by a ratio of two to one, as highlighted by Fitch Ratings.

One of the year’s biggest bankruptcies came from Party City, which filed for Chapter 11 for the second time in just over a year. 

Amid these financial challenges, the company made a decision to shut down all 700 of its stores. The stated reasons for this drastic action included pressures from inflation and a decrease in consumer spending by Americans. These factors parallel the issues faced by various other companies that are also grappling with financial difficulties.

Other major names like Tupperware, Red Lobster, and Spirit Airlines also filed for bankruptcy in 2024. Even popular vodka Stoli filed for bankruptcy in November. 

‘The persistently elevated cost of goods and services is weighing on consumer demands,’ said Gregory Daco, chief economist at EY, told the FT.  He said it was hitting lower-income families the most. 

Party City is shutting down all its stores immediately, putting an end to nearly four decades of business 

 While the Federal Reserve has started lowering interest rates, relief for businesses will be limited. Forecasts suggest only a half-point rate cut in 2025, keeping pressure on struggling companies.

Between 2021 and 2022 – when borrowing costs were low and Americans were still spending stimuls checks –  only 777 bankruptcy filings were recorded.

That is a a stark contrast to the 636 bankruptcy filings in 2023 and the 686 in 2024. 

At least 30 of last year’s bankruptcy filings involved firms with over $1 billion in liabilities, underscoring the scale of the financial strain.    

A rising number of businesses have turned to ‘liability management exercises’ -financial tactics aimed at avoiding bankruptcy by restructuring their debts. 

While these moves have become increasingly common, experts warn they are often just a temporary fix and can lead to companies eventually filing for bankruptcy anyway. 

Joshua Clark from Fitch Ratings explains that these moves can hurt lenders, as they typically mean taking on more debt and pushing a company closer to collapse. 

The most high profile bankruptcies have been among restaurant and retail chains – expecially those with locations across America. 

TGI Fridays continues to shutter restaurants – with another in Brick, New Jersey serving customers for the final time on Sunday. This is the Manhattan TGI Fridays

Tupperware is getting a new lease on life after a bankruptcy judge approved a deal to save the beloved food-storage company 

World of Beer is the latest restaurant chain to struggle

As of December 20, Coresight Research tracked 48 retail bankruptcies in the US compared with 25 during the same period a year ago. 

And at least 22 restaurant chains filed for bankruptcy this year, the highest number since 2020, according to BankruptcyData, a company that tracks filings.

The highest profile restaurant was Red Lobster, which filed for bankruptcy in May but emerged as a going concern after shuttering almost 100 restaurants. 

BurgerFi, Buca di Beppo and TGI Fridays also filed for bankruptcy. As did World of Beer, which was one of the fastest growing in America just ten years ago.

The most recent big retail bankruptcy was Container Store, which filed for Chapter 11 protection on December 22. There has been no news yet on its 

The store – known for its home organizational goods, including closet organizers and storage bins – has been around for 46 years.

Despite receiving a boost from Marie Kondo’s hit Netflix show ‘Tidying Up’ during the Covid-19 pandemic, the chain has been weighed down by mounting losses in recent years. 

Earlier in December, Big Lots said it was beginning ‘going out of business’ sales at all its stores across the US, after filing for bankruptcy in September. It now hopes to keep 200 open after finding a new investor.