April 2025: Recent Developments in Corporate Bankruptcy and Restructuring

In an effort to keep you apprised of what’s happening in the realm of bankruptcy and restructuring, here are several recent developments to be aware of.

1. Corporate bankruptcy filings in April 2025 showed a notable decline, with commercial Chapter 11 filings dropping 20% year-over-year to 434, down from 542 in April 2024. This decrease follows a significant surge in the first quarter of 2025, where 188 large U.S. companies filed for bankruptcy—the highest Q1 total since 2010. The early-year spike was driven by persistent financial pressures, including elevated interest rates and tighter credit conditions.

2. While overall commercial filings declined in April, small businesses continued to face challenges. Subchapter V elections within Chapter 11 increased by 4% year-over-year, reaching 218 filings in April 2025 compared to 210 in April 2024.

3. The technology and consumer discretionary sectors have been particularly impacted in 2025. Notable tech companies such as Mitel Networks, DocuData Solutions, and Ligado Networks filed for bankruptcy in Q1, each with liabilities exceeding $1 billion. In the consumer discretionary space, brands like Forever 21 and Joann have also sought bankruptcy protection, highlighting the ongoing challenges in retail and related industries.

4. In March, the U.S. Supreme Court ruled in United States v. Miller that bankruptcy trustees cannot recover federal tax payments made by debtors if no actual creditor could have obtained relief under applicable state fraudulent-transfer laws outside of bankruptcy. This decision clarifies the limits of sovereign immunity waivers under the Bankruptcy Code and may impact future strategies employed by trustees in asset recovery efforts.

5. U.S. bankruptcy courts in Delaware and New York recently approved the enforcement of nonconsensual third-party releases granted in foreign insolvency cases under Chapter 15 of the Bankruptcy Code. In the Crédito Real case, the Delaware court recognized a Mexican court's approval of a restructuring plan that included such releases, despite objections based on U.S. public policy. Similarly, the New York court upheld nonconsensual third-party releases in the Odebrecht Engenharia e Construção S.A. case, reinforcing the principle of comity in international insolvency matters. These cases are noteworthy because in Harrington v. Purdue Pharma, LP the U.S. Supreme Court ruled that nonconsensual third-party releases were impermissible in a Chapter 11 plan.