US bankruptcy filings drop for private equity-backed companies in 2025

US private equity portfolio company bankruptcy filings declined in 2025 compared with the previous year as distressed companies pursued out-of-court settlements while credit became more available.

Bankruptcy filings by private equity- and venture capital-backed US companies totaled 66 between Jan. 1 and Dec. 14, lower than 81 for the entire 2024, according to S&P Global Market Intelligence data.

Overall US bankruptcies, including nonportfolio companies, reached 749 in 2025 through Dec. 14, higher than 688 filings for all of 2024.

"We are still seeing a significant amount of capital flowing into both private equity-backed companies and public companies, including through private credit that's allowing distressed companies to raise liquidity and to address maturities," said Jacob Adlerstein, partner at Paul Weiss Rifkind Wharton & Garrison LLP's restructuring department.

"That is causing some of the drop in actual Chapter 11 filings because you just have more liquidity out there that's available to help address issues that may have otherwise caused companies to file for Chapter 11," he said.

Matthew Roose, co-head of the business restructuring group at Ropes & Gray LLP, added that distressed private equity-backed companies in the middle market, defined as those with capital structures of less than $1 billion, are often able to assemble creditors for an out-of-court restructuring transaction.

"Out-of-court restructuring transaction reduces the administrative cost of doing the restructuring, and it also reduces the noise around the company and the restructuring since it's not a public bankruptcy. That can have benefits for the business overall," Roose said.

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Sector-specific bankruptcies

Of the 66 filings by private equity-backed companies in 2025, 14 were from the consumer discretionary industry and 13 were from healthcare.

For companies relying on consumer spending, trends that have caused distress over the past two years, such as high interest rates and inflation, still linger today, Adlerstein said, adding that tariffs have also ramped up pressure on some companies, playing a role in Chapter 11 filings.

Meanwhile, some private equity-backed healthcare deals were challenged by leverage profiles of the companies, changes in medical reimbursement rates and shifts in the healthcare landscape, Roose said.

Largest bankruptcies

Equistone Partners Europe Ltd.-backed pharmacy services provider Omnicare Inc. filed for Chapter 11 bankruptcy process on Sept. 22. In connection with the process, the company agreed to a $110 million debtor-in-possession financing.

Claire's Holdings LLC, a retailer of jewelry and accessories for teens, commenced voluntary Chapter 11 proceedings on Aug. 6. The Apollo Global Management Inc.-backed company had more than $1 billion in liabilities at the initial filing, according to Market Intelligence data.

Outlook

The modest growth in bankruptcy filings in the US is expected to continue in 2026 as interest rates remain high by historic standards, Adlerstein said.

"The countervailing factor there is that companies will look for opportunities to use liability management transactions or to raise capital through private credit or other alternative capital providers to address liquidity needs and potentially solve maturity walls," he said.

However, Roose noted that companies that pursued liability management transactions, which involve changing the terms of loans or debts, in 2024 and 2025, may opt for operational restructuring in 2026.

"Historically, liability management transactions are a predecessor to a full restructuring. Sometimes they work out for the sponsors, but oftentimes, they don't," he said.

Terminated transactions

The number of terminated private equity-backed deals in the US stood at 15 in 2025 through Dec. 21, compared with 21 for full-year 2024, according to Market Intelligence data.

Private equity-backed deals accounted for 22% of all terminated transactions in the US, which stood at 68 in 2025.

The value of terminated private equity transactions in 2025 totaled $119.52 billion, while the value of all terminated M&A deals was $173.09 billion.