Epiq reports 38% rise in September small-business bankruptcy elections
Subchapter V elections rose while total commercial Chapter 11 filings fell. Related-company cases complicate the comparison for lenders tracking borrower risk.
Epiq AACER reported 276 small-business Subchapter V elections in September, up 38% from 200 a year earlier. Its October 8 bankruptcy filing report also recorded a 16% decline in commercial Chapter 11 filings for the month, to 648 from 769. The broader decline came alongside continued growth in the small-business restructuring category. Funders should keep the small-business figures separate when reviewing portfolio risk. A lower national Chapter 11 count offers little basis for easing a watchlist if the relevant borrower category is moving in the other direction. Neither series measures an individual funder’s defaults, recoveries or exposure to the businesses that filed. The September release confirms that Subchapter V activity remained above the previous year. Through the first nine months of 2026, Epiq counted 2,442 elections, up 46% from 1,672 in the same period of 2025. Commercial Chapter 11 filings over that longer period rose 11% to 6,560 from 5,895. September’s decline in the broader category therefore differs from its year-to-date direction. ABF Journal’s October 9 coverage led with the monthly Chapter 11 decline. Epiq’s own headline emphasized the nine-month increase in Subchapter V elections. Both describe the same release. A lender carrying either headline into a credit meeting needs to retain the category and period attached to it. Epiq also flagged an important comparison issue. September 2025’s commercial filing total included 109 related filings associated with a long-term care pharmacy services provider. A business group can generate many legal-entity cases. A change in the number of filings can therefore reflect the structure of a corporate group as well as the number of unrelated businesses seeking relief. That footnote does not provide a fully adjusted comparison. The release does not give matching group-level counts for both years, so subtracting the identified cases from one period would create an uneven measure. The published figures support a description of filing activity. They do not establish how many independent borrower groups failed or how much lender capital was exposed. The U.S. Courts’ Chapter 11 guide explains that a debtor usually proposes a reorganization plan to keep operating and pay creditors over time. Chapter 11 can also involve a liquidating plan. A filing count alone cannot tell a funder which outcome will follow, how long recovery will take or what a particular claim will receive. For an MCA or revenue-based finance portfolio, the useful next step is to match any bankruptcy alert to the legal name on the agreement. Then connect that entity to other businesses under common ownership without merging their obligations. A trade name, shared address or common owner can help identify a relationship, but each exposure still needs its own contract and case record. Portfolio reporting should retain two views: the number of legal entities in proceedings and the number of connected borrower groups. Keep the amount outstanding beside each view and prevent the same obligation from appearing twice in the group total. That lets a credit team distinguish one multi-entity restructuring from several unrelated merchant problems. Date each balance and identify payments received after the filing so a later collection does not disappear inside an older exposure figure. The national data cannot supply those links. Epiq’s release gives no MCA exposure breakdown, lender loss estimate or borrower-level repayment history. Those limits matter when deciding whether a monthly filing change calls for more monitoring, different pricing or a change in funding appetite. Opinion Keep entity counts and dollar exposure together Before changing a portfolio limit on the strength of a bankruptcy headline, ask for the matching borrower list and exposure amounts. A September decline in total Chapter 11 filings should not override current payment evidence from merchants on the watchlist. Follow small-business credit developments at plutusai.net .