The pace of US corporate bankruptcy filings showed little sign of slowing in May amid ongoing struggles related to high interest rates and shifting consumer spending patterns, particularly among the poorest Americans.

S&P Global Market Intelligence recorded 62 new bankruptcy filings in May, down from a revised 69 filings in April. The 275 year-to-date filings recorded in 2024 are nearly on par with the previous year's 277, even amid a slowdown in the labor market and loosening borrowing conditions.

Notable filings

Hospital operator Steward Health Care System LLC, which manages 31 hospitals across eight states, sought bankruptcy protection May 6. A delay in the sale of one of its businesses, lower reimbursement rates from government healthcare plans and rising costs all contributed to its decision to file for bankruptcy, according to a press release.

The company said it received $75 million in initial financing and may get up to $225 million more if certain requirements are met.

Seafood restaurant operator Red Lobster Management LLC filed for bankruptcy May 19, with plans to sell its business to a group of existing lenders and close some locations. The company, which operates locations across 44 US states, has already secured $100 million in financing from its existing lenders.

Other notable filings in the beleaguered consumer discretionary sector included clothing retailer New Rue21 Holdco Inc., music retailer Sam Ash Music Corp. and children's toy manufacturer KidKraft Inc.

In addition to Red Lobster and Steward Health Care System, two other companies with over $1 billion in liabilities sought bankruptcy protection in May: construction engineering company Zachry Holdings Inc. and survey research data provider Dynata LLC. The four new filings brought the year-to-date total of large bankruptcies to 17, compared to 22 filed over the entirety of 2023.

Consumer discretionary leads with most monthly filings

Just under 20% of the month's bankruptcy filings came from the consumer discretionary sector as Americans continued to scale back their discretionary spending, keeping the sector at the top of the list with the most year-to-date bankruptcies.

Just three sectors — consumer discretionary, industrials and information technology — accounted for more than 43% of corporate bankruptcies in May with 27 collective filings.

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Among individual states, companies headquartered in Texas recorded the most filings with 13 in May, followed by nine from California and seven from both Florida and New York.

Besides Massachusetts and Illinois with five filings each, all other states registered fewer than two corporate bankruptcies in May.

This Data Dispatch is updated regularly. The last edition was published May 7.

Bankruptcy figures include public companies or private companies with public debt with a minimum of $2 million in assets or liabilities at the time of filing, in addition to private companies with at least $10 million in assets or liabilities. S&P Global Market Intelligence may remove companies from this list if it discovers that their total assets and liabilities do not meet the threshold requirement for inclusion.