December 2024: Recent Developments in the Realm of 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. The 2024 corporate bankruptcy total could reach a 14-year high. New data from S&P’s Global Market Intelligence showed that November’s 69 bankruptcy filings from public and certain private companies were the second-highest monthly total since early 2021 and pushed the year-to-date total to 634, nearly exceeding last year’s 636 total filings. If December continues at the same rate we’ve seen all year, 2024 will end with the highest total number of bankruptcies since the peak of the Great Recession in 2010.

2. In November, four notable Chapter 11 filings exceeded $1 billion in liabilities: H-Food Holdings LLC, Spirit Airlines Inc., Wellpath Holdings Inc., and Franchise Group Inc. S&P’s data also shows that the consumer discretionary, industrials, healthcare, consumer staples, and information technology sectors saw the most bankruptcy filings in 2024, mainly because inflation, high interest rates, and changing consumer spending habits are more acutely impacting those industries.

3. More restructuring taking place through receivership proceedings may be coming to the cannabis industry due to heavy debt loads. While it's hard to know how much debt is being held by private companies in the industry, we know from reporting in the Green Market Report that four publicly traded, multi-state cannabis operators have more than $1.8 billion in debt maturing in 2026 alone.

4. In a decision that grappled with the challenges of providing notice to parties involved in cryptocurrency-related disputes, the U.S. Bankruptcy Court for the Southern District of New York authorized the use of NFTs to serve legal documents on anonymous defendants in three adversary proceedings related to the Celsius Network bankruptcy proceedings. The October 2024 ruling allows for "airdropping" NFTs to cryptocurrency wallet addresses when traditional methods of service are not feasible due to unknown defendant identities and locations.