19 August 2026
Bankruptcy Developments in 2026: Considerations for Creditors
Bankruptcy activity increased across both the consumer and commercial sectors during the first half of 2026. Filings over the twelve months ending June 30th exceeded 608,000, an increase of more than 12 %1, and small business filings under Subchapter V rose about 50 %, from 1,107 to 1,663 cases2. These figures are consistent with projections in an earlier firm publication and indicate broadening financial distress across consumer and commercial portfolios3.
Beyond the increase in volume, debtors have adopted approaches that have a direct effect on creditors. Cases are proceeding on shorter timelines, filings are appearing in less familiar venues, and a growing number of debtors are restructuring outside the U.S. bankruptcy system. Each of these developments affects where a creditor’s claim is adjudicated and the leverage available to the creditor once a case begins.
Beyond the increase in volume, debtors have adopted approaches that have a direct effect on creditors. Cases are proceeding on shorter timelines, filings are appearing in less familiar venues, and a growing number of debtors are restructuring outside the U.S. bankruptcy system. Each of these developments affects where a creditor’s claim is adjudicated and the leverage available to the creditor once a case begins.
Prepackaged and Pre-Negotiated Plans
Prepackaged and pre-negotiated plans have in the past signaled consensual restructurings, with limited litigation expected after filing. That expectation has shifted. Several large debtors in 2026, including Multi-Color, Trinseo, and QVC, filed with prepackaged or pre-negotiated plans but encountered intercreditor disputes over debtor-in-possession financing that delayed confirmation4. A plan described as consensual should not be assumed to be settled. A creditor that treats the outcome as fixed may find its treatment determined before it has an opportunity to object.
Liability Management and Intercreditor Disputes
Liability management transactions, including uptier and drop-down structures that advantage one lender group over another, are receiving greater judicial scrutiny and generating additional litigation. A New Jersey court’s ruling on Del Monte’s debtor-in-possession rollup rejected a minority lender group’s breach-of-contract claim concerning the rollup of about $247.5 million in prepetition debt, and lenders in the Serta Simmons up tier dispute cited that ruling within days5. For a creditor participating in a syndicated facility, risk arises not only from the borrower but also from other lenders positioned to subordinate its interests. Intercreditor agreements have become central to the analysis.
Third-Party Releases and Guarantors
In Harrington v. Purdue Pharma L.P., the Supreme Court held that a Chapter 11 plan cannot impose nonconsensual releases of claims against non-debtors6. In commercial finance, such releases most often involve personal guarantors. The decision confirms that a guarantor seeking the protection of the automatic stay and discharge must file its own bankruptcy petition, and that a guarantor cannot obtain that protection without doing so.
Cross-Border Restructurings
Some debtors have restructured outside the United States to obtain broader releases or reduce costs. New Fortress Energy restructured about $5 billion in debt in the United Kingdom, and The Cannabist Company conducted a Canadian proceeding before obtaining U.S. recognition, a result that had been unavailable because of marijuana’s status under federal law7. A U.S. creditor may find its debt restructured under foreign law and may be bound through a Chapter 15 recognition proceeding on terms and timelines that differ from those in a domestic case.
The Texas Two-Step
The Texas Two-Step, in which a company divides its liabilities into a new entity that then files for bankruptcy, remains available. In June 2026, the Supreme Court declined to review the Bestwall case, leaving the strategy in place for companies facing significant tort liability8.
Venue
Venue practices have shifted, though established districts remain prominent. A New Jersey decision permitting Multi-Color to retain its case in that state has made New Jersey available to companies with limited connections to it. Delaware and the Southern District of Texas continue to attract the largest filings, and Houston remains a frequent venue for major reorganizations9. Venue determines the presiding judge, the applicable local rules, and the governing precedent, each of which affects a creditor’s objections, motions for relief from stay, and proofs of claim.
Assignments for the Benefit of Creditors
As the cost of Chapter 11 has increased, more distressed companies are using assignments for the benefit of creditors to sell assets and wind down outside of bankruptcy. At least nine states are considering a uniform statute governing these proceedings10. For secured lenders and lessors, this trend results in more workouts occurring outside Chapter 11, where notice requirements, deadlines, and distribution rules differ from those in a bankruptcy case.
Considerations for Creditors
Several practices remain important as these developments continue. Creditors should perfect liens within the applicable statutory period because a lien perfected outside that window may render the creditor unsecured. Creditors should monitor counterparties for early indicators of financial distress rather than waiting for a bankruptcy filing. Intercreditor and financing documents should be reviewed before a case commences. When a customer files, prompt action helps preserve claims, because bankruptcy deadlines can foreclose rights that are not asserted in a timely manner.
The developments of 2026 provide debtors with additional options for resolving financial distress, many of which proceed on accelerated timelines. Creditors that monitor these developments and act early are better positioned to protect their claims and to maximize recoveries.
The developments of 2026 provide debtors with additional options for resolving financial distress, many of which proceed on accelerated timelines. Creditors that monitor these developments and act early are better positioned to protect their claims and to maximize recoveries.
Connect With Our Team
Our team is constantly monitoring changes within the industry. Thank you to Weltman’s Cleveland Summer Law Clerk Elizabeth Santiago for writing this Weltman Insight. To learn more about Weltman’s Bankruptcy Recovery Solutions, click here.1 Bankruptcy filing statistics from the Administrative Office of the U.S. Courts, as reported in Rick Archer, Bankruptcies Rise In 2026 As Small Biz, Consumers Seek Help, Law360 (July 30, 2026).
2 Epiq AACER data, as reported in Michael L. Moskowitz, Rising Bankruptcy Filings Signal Increased Risk for Creditors in 2026 (July 13, 2026).
3 Milos Gvozdenovic & Garry Masterson, What Creditors Can Expect in Bankruptcy for 2026, Weltman, Weinberg & Reis Co., L.P.A. (2026).
4 Alex Wittenberg, The Biggest Surprises In Bankruptcy In 2026: Midyear Report, Law360 (July 10, 2026).
5 Wittenberg, supra note 4.
6 Harrington v. Purdue Pharma L.P., 603 U.S. 204 (2024).
7 Wittenberg, supra note 4.
8 Cert. denied sub nom. Official Comm. of Asbestos Claimants v. Bestwall LLC (U.S. June 1, 2026), leaving the Fourth Circuit's 2025 ruling in place.
9 Wittenberg, supra note 4.
10 Wittenberg, supra note 4.
This blog is not a solicitation for business, and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.