The U.S Leveraged Loan Default Spikes
Mega Bankruptcies over the Weekend
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Since March 28, 2025, there have been two meta bankruptcies: Heritage Coal & Natural Resources and MS Leisure Company. In March, there were 16 companies, each with assets valued at $100 million or greater, that filed for bankruptcy. Notably, there were 3 billion-dollar company bankruptcies: DocuData Solutions, Forever 21, and MLN US Holdco. (Mitel). In addition, yesterday, restaurant chain Hooters of America filed for bankruptcy in Texas, seeking to address its $376 million debt by selling all of its company-owned restaurants to a franchise group backed by the company’s founders. Hooters said it expects to complete the deal and emerge from bankruptcy in three to four months. The company has lined up about $35 million in financing from its existing lender group to complete the bankruptcy transaction.
There have now been 8 companies that have filed for bankruptcy in 2025 with liabilities over $1 billion. This is S&P’s list of the largest bankruptcies in 2024. There were 32 billion-dollar bankruptcies last year.
Overall, the rating actions were positive from S&P last week, with more upgrades than downgrades and only 1 default from a Canadian mining company. The distressed debt ratio fell to 5.2% and an Italian Bank became a rising star.
Now, a more concerning trend. According to the latest S&P data, the United States leveraged loan default rate1 is set to spike by 1.6% through December 2025.
There are already signs of struggle among some corporate borrowers, with a recent uptick in speculative-grade defaults (led by selective defaults) and payment-in-kind, as some borrowers' cash flows have been under pressure.
Here are some companies that have distressed debt, and their stock prices have also not been performing well. We expect that these Companies will most likely go bust in 2025.