Despite a whirlwind of reports of economic troubles in almost every industry, corporate bankruptcy filings in the United States are at their lowest in more than a decade, according to S&P Global Market Intelligence data. The 31 filings that took place in September were a 16% dip from the 37 filings in August.

As of the end of last month, 279 companies had filed for bankruptcy in 2022, which the S&P reports is the lowest since at least 2010. According to the S&P data, which includes public and private companies with assets or liabilities of at least $10 million, the rate of corporate filings for bankruptcy in the first nine months is off 14% from 2021. 

“The period of low bankruptcy filings certainly won't last forever,” Chris Hudgins, data analyst at S&P Global Intelligence and author of the report, told CFO. “Those companies that were able to stay afloat with the help of federal assistance may be in trouble if they haven't addressed underlying business issues.”

Despite June’s peak of 39 bankruptcies, 2022 has seen few midsize and large businesses go belly up. Leading the way as an industry was industrials with 48 filings as of the end of September. Consumer discretionary businesses didn't trail far behind with 43 filings. Healthcare rounded out the top three with 28 filings so far this year.

Pandemic-induced restrictions on businesses were the cause of higher bankruptcies in 2020, thus making the numbers being recorded now appear low only in comparison, according to Hudgins.

“We saw a large number of filings in 2020 as many of the most-vulnerable companies filed for bankruptcy during the COVID-19 pandemic,” he said. “Some of those companies that might have been able to hold out a bit longer under normal circumstances were instead pushed over the edge into bankruptcy due to the economic conditions."

According to an Oct. 4 report by S&P Global Market Intelligence, worsening financial conditions suggest the U.S. is likely to enter a recession with a mild decline in GDP growth, but with unemployment rising to 6% from 3.5%. Therefore, it’s not surprising analysts like Hudgins believe that these numbers may not stay low for too much longer. 

“Due to the bankruptcy timeline of the more-vulnerable companies being accelerated in 2020, along with the availability of government relief programs helping more borderline companies stay afloat, we recorded a small count of filings in 2021 and 2022,” he said. “Given the current economic conditions and rising interest rates, I would expect to see the pace of bankruptcy filings pick up in the future.”

When asked specifically about the sustainability of the dipping bankruptcy rates, Hudgins made it clear it is a matter of letting conditions play themselves out.

“We will have to wait and see how long it takes for the current economic challenges to materialize through the bankruptcy filings,” he said. “Government assistance is now coming to an end, and the economy is facing new problems with sustained high inflation and rising interest rates.” 

Hudgins talked about the recent evaporation of cheap credit in the U.S. economy, a capital stream many businesses of all sizes relied on to rebuild, expand, or stay afloat during and after pandemic-induced woes. 

“As interest rates are increasing, credit availability is getting more limited and costly. Banks are also starting to tighten their lending standards,” Hudgins said. “Companies looking to finance debt may find it difficult and more expensive, which could prove even more troublesome for those with large debt sums coming due as their options for refinancing narrow.”

Despite only having 13 total filings in 2022, the information technology industry accounts for three of the four largest bankruptcies this year. OSG Group Holdings, Aearo Technologies, and Celsius Network each had more than $1 billion dollars in liabilities at the time of their filings. Aearo and Celsius filed for bankruptcy in July and OSG in August,

Unlike the previous three months, September had no bankruptcy filings with more than $1 billion in reported liabilities in any industry, according to the data.