All information in this COVID-19 Response Resource issue is effective as of September 9, 2020.

Business bankruptcy filings during the pandemic are not trending as they did during the Great Recession. During the Great Recession, business bankruptcy filings accelerated. To date, the pandemic has decelerated the rate of bankruptcy filings.

Despite a deep recession that began in March 2020, relatively few businesses filed for bankruptcy through July 2020. In August, monthly business bankruptcy filings of all types declined further – by 11 percent, with Chapter 11 reorganizations showing the greatest decline of 18 percent. In Bellwether, Delaware, Chapter 11 filings declined 43 percent in August. Fewer Chapter 11 cases were filed in August than in any month during 2020.

Now there’s a backlog of perhaps 7,000 cases – a pent-up demand for bankruptcy relief. When the logjam breaks, there will be a wave of business bankruptcies and business fail­ures. That wave will reduce wages and corporate income, disrupt supply chains and result in a glut of assets for sale.

The longer it takes for filings to begin to rise, the larger the backlog and resulting tsunami will be, and the greater both the collateral damage and the opportunities to buy cheap.


The Weekly Economic Index shows the economic shock of the pandemic to have been sharper and deeper than that of the Great Recession:

Despite enormous economic stress, business bankruptcy filings year-to-date in 2020 are below the normal levels of the last three years. In 2020, prior to the pandemic, filings were high in January and returned to normal levels in February. After the pandemic gained momentum, filings fell nearly 30 percent from March to April and have remained below normal since:

In March, April and May 2020, there was an inverse relationship between COVID-19 cases and business bankruptcy filings—as cases rose, filings fell. In August, cases fell and so did filings:

Business bankruptcy filings in our four most populous states mirror the national trend of decelerated filings. Even Texas, which has been one of the most bankruptcy-active states in 2020, is showing no surge:

Remarkably, as of Aug. 31, 2020, only six states have had more filings year-to-date in 2020 than they did in 2019. In Utah, there have been 40 percent fewer business bankruptcy filings this year than last. The national backlog of cases may by now exceed two typical months of filings: 

Over the past 12 months, the Mountain West states have been consistent with the national trend of decelerated filings. The surge here in March is mostly attributable to Chapter 13 filers, with sole proprietorships aiming to protect their tax refunds. Certainly, there is no spike.


The pandemic has caused a recession more damaging than the Great Recession. But while the Great Recession accelerated a wave of business bankruptcy filings, the pandemic has decelerated such filings. There is now a backlog of bankruptcy filings which represents a pent-up demand for bankruptcy relief. When the logjam breaks, there will be a wave of bankruptcy filings and business failures. The longer the logjam holds, the worse the collateral damage will be.

It looks as though the bankruptcy logjam is building into a tsunami.

Time is short to prepare. Currently, all businesses should be closely monitoring the financial condition of customers and suppliers and considering carefully what assets they might want or need to purchase after the tsunami breaks.


Parsons Behle & Latimer’s Financial Distress Response Team is constantly updating its ongoing analysis of economic and bankruptcy trends, including a list of factors we believe are decelerating bankruptcy filings. To see our most recent update, click here