Rising Chapter 11 filings signal incoming wave of bankruptcy preference actions for vendors

Short summary

Elevated Chapter 11 filings in 2024-2025 guarantee a coming wave of preference avoidance actions targeting vendors who received payments from distressed customers. Trustees and contingency-fee counsel will send demand letters in bulk as two-year filing deadlines approach. The strongest defenses—ordinary course of business and subsequent new value—depend entirely on documentation created before any demand arrives, making proactive record-keeping critical.

• •Commercial Chapter 11 filings at decade highs guarantee a surge in preference demand letters in 2026-2027
• •Ordinary course and subsequent new value defenses require payment-history documentation built before demands arrive
• •Credit management actions that tighten terms can inadvertently destroy preference defenses

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