US bankruptcies flat for private equity-backed companies, up overall in H1 2025

The rising cost of goods and persistently high interest rates helped maintain the number of US private equity portfolio company bankruptcies in the first half of 2025.

Bankruptcy filings by private equity- and venture capital-backed US companies totaled 52 between January and June, unchanged from the same period in 2024, according to S&P Global Market Intelligence data.

Overall US bankruptcies, including nonportfolio companies, reached 371 in the first six months of 2025, up 10.7% year over year from 335.

Elevated interest rates have posed challenges for private equity-backed businesses, making financing surprisingly difficult, said John Sparacino, principal at McKool Smith.

"There's been some pullback in traditional lending, but private credit is filling that void," Sparacino said. "Private credit is out there with a ton of dry powder. The money is there, but it's expensive money. Maybe that's the real killer for midmarket portfolio companies if the sponsor is not willing to step in and fill up the hole."

Global private debt dry powder reached a record $469.60 billion as of July, according to Market Intelligence data provided by Preqin.

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Sector-specific bankruptcies

Of the 52 bankruptcy filings by private equity-backed companies in the first half, 22 were from the consumer discretionary and healthcare sectors.

Rising costs and labor pressures are squeezing companies, particularly in the healthcare and consumer discretionary sectors, said Frasher Murphy, partner and former chair of the restructuring practice group at Haynes and Boone LLP.

"Household debt is at an all-time high," Murphy said. "Consumers now have to deploy more of their monthly income on their household, which decreases the overall pot of money they would deploy for discretionary spending."

Challenges pertaining to Medicare and Medicaid reimbursements also create a disruption in the revenue cycle of healthcare companies, Murphy added.

Largest bankruptcies

The Chapter 11 filing by Hellman & Friedman LLC-backed furniture retailer At Home Group Inc. was among the largest private equity portfolio company bankruptcies in the first half. The restructuring will eliminate nearly $2 billion in debt and provide a $200 million capital infusion.

Weight management company WW International Inc., also known as WeightWatchers, announced in May that it will undergo reorganization to eliminate $1.15 billion in debt. The company's private equity investors include General Catalyst Group Management LLC, Artal Group SA, Littlejohn & Co. LLC and The Invus Group LLC.

Outlook

Private equity portfolio company bankruptcies are expected to remain elevated due to high interest rates and consumer pullback, said McKool Smith's Sparacino, adding that trade policy uncertainty will also pose challenges for these companies.

"In some of the most recent complex Chapter 11 cases that have been filed, part of the blame by the filing entity was increased costs from the tariffs that have been imposed. You're going to see more get imposed."

Terminated transactions

The number of terminated private equity-backed deals in the US fell to nine in the first half from 13 in the same period in 2024, according to Market Intelligence data.

Private equity-backed deals accounted for 30% of all terminated transactions in the US, which stood at 30 in the first half.

The value of terminated private equity transactions in the first half totaled $105.33 billion, while the value of all terminated M&A deals was $127.65 billion.