2025 Year-End Restructuring Roundup

Looking back at the past year of corporate restructuring activity, a clear and somewhat unusual pattern emerged in 2025: distress was widespread, not concentrated.

In prior cycles, restructuring activity often clustered around a specific shock or sector—energy, retail, or crypto, for example. In 2025, there was no comparable focal point. Instead, financial stress emerged across industries, company sizes, and capital structures.

Several themes defined the year.

Broad-Based, Cross-Sector Distress

No single industry dominated restructuring activity in 2025.

Industrials recorded the highest number of bankruptcy filings, but healthcare, consumer discretionary, logistics, hospitality, airlines, retail, and technology all saw significant distress. High-profile Chapter 11 cases included Sonder, Spirit Airlines, Claire’s, and Omnicare, each reporting more than $1 billion in liabilities.

According to S&P Global Market Intelligence, large corporate bankruptcy filings reached their highest annual level in 15 years—even before year-end figures were finalized. Unlike past cycles, restructuring activity was not “industry sticky.” Distress appeared across a broad mix of sectors simultaneously.

Layoffs as Strategic Realignment

Workforce reductions were a defining feature of 2025, but many were driven by strategy rather than crisis.

More than 1.1 million job cuts were announced during the year, largely tied to restructuring, operational streamlining, and capital reallocation. Technology companies such as Intel, Microsoft, Amazon, and Meta reduced headcount while increasing investment in AI and automation.

Similar dynamics were seen outside tech. UPS and Target implemented significant job cuts as part of broader cost and operational resets.

In many cases, layoffs were not a signal of imminent insolvency, but a component of longer-term repositioning.

The Impact of Higher Rates Became Unavoidable

After several years of low-cost capital, the effects of higher interest rates became more visible in 2025.

Rising borrowing costs, tighter credit conditions, and persistent inflation exposed capital structures that were sustainable in a low-rate environment but less resilient under current conditions. The result was an increase in large corporate bankruptcies and a renewed focus on balance sheet repair.

As the American Bankruptcy Institute has noted, bankruptcy is increasingly being used as a tool to stabilize operations and restructure debt, rather than simply to liquidate businesses.

Distress Extended Down-Market

Restructuring activity was not limited to large corporate cases.

Subchapter V filings by small businesses increased nearly 10% year-over-year, reflecting growing pressure on smaller enterprises. Individual bankruptcies also rose, driven by higher household costs and debt burdens. November data showed year-over-year increases in both Chapter 7 and Chapter 13 filings.

The trend was consistent across the spectrum: financial strain was widespread and not confined to any single category of debtor.

Looking Ahead

The defining feature of 2025 was not a single shock or sector-specific downturn. It was a broad recalibration of capital structures, cost bases, and strategic priorities across the economy.

If these conditions persist into 2026, restructuring activity is likely to remain elevated—and increasingly complex—requiring coordination across legal, financial, operational, and strategic disciplines.