Global Bankruptcy Report

Dun & Bradstreet’s latest annual Global Bankruptcy Report shows that business bankruptcies surged 26% in 2025, climbing from 35,640 to 44,932 cases year-over-year, with every quarter exceeding its 2024 counterpart. Companies entered the year already weakened by elevated debt loads, rising operating costs, and tighter access to capital. By Q1, filings jumped to 10,777. Bankruptcies peaked in Q3 at 11,835 before easing slightly to 11,147 in Q4 – still considerably elevated compared to historical norms.

Dr. Arun Singh, Chief Economist at Dun & Bradstreet, notes that 2025 reflects a meaningful turning point: “Across the 45 economies monitored by Dun & Bradstreet, bankruptcy filings rose by 7% – a clear moderation from the sharp 15% increase recorded in 2024. He emphasizes that easing inflation, softer energy prices, and a more supportive monetary backdrop helped alleviate the acute cost pressures that defined the prior year.

In the U.S., interest-rate pressures continued to weigh heavily on businesses, contributing to a higher rate of bankruptcies. Firms carrying elevated debt loads or depending on high-tariff inputs remained particularly exposed: many refinanced at higher rates last year and will continue to feel that pressure, even if monetary policy eases. Business sentiment reflected the strain as well – the U.S. Business Optimism Index fell sharply by –9.4% in Q1 and remained negative throughout the year, dipping again in Q3 as bankruptcies climbed.

Despite the US Federal Reserve cutting their main policy rate in the second halves of 2024 and 2025, credit conditions have tightened across the board. Firms with maturing pandemic-era loans faced higher refinancing costs, and both banks and private lenders adopted stricter standards. Wage and insurance expenses remained elevated. These tighter lending standards typically persist long after headline interest rates begin to fail, and with negative business optimism in every quarter of 2025, many companies entered the new year cautious about investment, hiring, and inventory decisions.

New and expanded tariffs amplified operational stress, pushing up the cost of imported machinery, metals, and consumer goods. Early in the year, companies expedited shipments to avoid impending tariff hikes, leading to a 26% surge in U.S. imports in Q1. The temporary boost masked deeper vulnerabilities: once front‑loaded inventories were depleted, firms had to absorb higher‑tariff, higher‑cost inputs. Those pressures fell especially hard on manufacturers, wholesalers, and retailers reliant on imported intermediate goods.

International spillovers added to the strain. By November, German exports to the U.S. had contracted 22.9% year over year after tariff rates on EU goods rose to 15%, creating additional pricing pressure for U.S. buyers already facing cost volatility.

Some sectors felt the impact more acutely than others. Industries with high import penetration (electronics, automotive components, home goods, and specialty machinery) faced the steepest tariff‑related cost increases and the greatest uncertainty surrounding trade policy. Many firms weren’t able to adjust sourcing quickly enough to avoid margin compression. Wage‑intensive consumer sectors also struggled under labor costs that never fell back to pre‑2020 levels. For small and midsize firms, the combination of rising costs and tighter credit proved especially difficult.

In contrast, Canadian bankruptcies fell 22% in 2025, largely because many of the country’s most vulnerable firms had already failed amid 2024’s sharp correction. Although U.S. tariffs weighed on Canadian exporters, the overall failure rate cooled, highlighting how timing and differing policy environments can produce divergent outcomes even within the same region.

Looking ahead, U.S. failure rates are likely to remain above pre‑2023 norms into 2026 without meaningful credit loosening or tariff relief. Tariff‑sensitive sectors will likely continue to face higher‑cost inputs and policy uncertainty, while wage‑intensive industries may still contend with elevated labor expenses.

Insights from Dun & Bradstreet’s Global Business Optimism Insights report reinforce these risks, showing that business sentiment remained negative throughout 2025 and is expected to stay subdued as firms navigate higher financing costs, persistent cost pressures, and weaker demand signals. As Dr. Arun Singh observes, “Persistent ambiguity around the direction of global trade rules and tariff actions is likely to keep many companies cautious, reinforcing pressures on liquidity and operational flexibility.”

Taken together, these conditions suggest that even modest shocks could push more firms into distress. Still, the report highlights clear areas of opportunity: companies that diversify supply chains, strengthen credit monitoring, and adopt more flexible financing strategies will be better positioned to weather the year ahead.