Key Takeaways
- • Private equity firms were involved in 54% (19 of 35) of the largest U.S. corporate bankruptcies in 2025, defined as cases with $1 billion or more in liabilities, despite PE accounting for approximately 7% of the U.S. economy—a significant overrepresentation relative to PE's economic footprint.
- • PE-backed companies represented 51% (21 of 41) of bankruptcies involving $500 million or more in liabilities, and accounted for 10% of all U.S. corporate bankruptcies in 2025, according to the Private Equity Bankruptcy Tracker released by the Private Equity Stakeholder Project (PESP).
- • Consumer discretionary sector bankruptcies were heavily PE-dominated, with private equity-backed companies accounting for more than 71% of the largest retail failures in 2025, including Joann Fabrics, At Home, and Claire's—reflecting vulnerability to debt-heavy acquisition structures.
- • Manufacturing and healthcare sectors showed pronounced PE bankruptcy concentrations, with PE-backed firms representing 60% of the largest manufacturing bankruptcies and 44% of the largest healthcare bankruptcies, indicating sector-specific vulnerability to leveraged ownership models.
- • Large-scale bankruptcies create cascading economic damage beyond investors, including widespread job losses, store closures affecting local communities, and potential disruption to essential services such as healthcare access.
Summary
According to data released by the Private Equity Stakeholder Project, private equity firms played a decisive role in a disproportionate share of America's largest corporate bankruptcies in 2025. Of the 35 largest U.S. corporate bankruptcies that year—defined as those involving $1 billion or more in liabilities at filing—private equity was involved in 19 cases, representing 54% of this category. The disparity becomes more striking when considering that private equity accounts for roughly 7% of the total U.S. economy, indicating a bankruptcy concentration nearly eight times higher than would be expected based on PE's economic weight.
The overrepresentation extends across broader bankruptcy thresholds. Private equity played a role in 51% of bankruptcies involving at least $500 million in liabilities (21 of 41 cases), and accounted for 10% of all U.S. corporate bankruptcies filed in 2025. Jim Baker, executive director of PESP, emphasized the broader social implications: "Large bankruptcies don't just affect investors. They cost workers their jobs, close stores and facilities that communities depend on, and can undermine access to essential services like healthcare."
Retail and consumer discretionary sectors experienced the most severe PE-linked bankruptcy concentration. Private equity-backed companies accounted for more than 71% of the largest consumer discretionary bankruptcies in 2025, with notable failures including Joann Fabrics, At Home, and Claire's. Manufacturing followed closely, with PE-backed firms representing 60% of the largest manufacturing bankruptcies, reflecting what PESP characterizes as vulnerability to debt-heavy ownership structures. Healthcare emerged as another critical sector, with private equity-owned companies accounting for 44% of the largest healthcare bankruptcies in 2025—a particularly sensitive category given the essential nature of healthcare services and employment.
The data suggests that leveraged acquisition models common in private equity transactions may create heightened bankruptcy risk when market conditions tighten or operational challenges emerge. The concentration in consumer discretionary and manufacturing reflects sectors where PE buyers have historically pursued aggressive leverage strategies and cost-reduction initiatives that can constrain operational flexibility during downturns.
The overrepresentation extends across broader bankruptcy thresholds. Private equity played a role in 51% of bankruptcies involving at least $500 million in liabilities (21 of 41 cases), and accounted for 10% of all U.S. corporate bankruptcies filed in 2025. Jim Baker, executive director of PESP, emphasized the broader social implications: "Large bankruptcies don't just affect investors. They cost workers their jobs, close stores and facilities that communities depend on, and can undermine access to essential services like healthcare."
Retail and consumer discretionary sectors experienced the most severe PE-linked bankruptcy concentration. Private equity-backed companies accounted for more than 71% of the largest consumer discretionary bankruptcies in 2025, with notable failures including Joann Fabrics, At Home, and Claire's. Manufacturing followed closely, with PE-backed firms representing 60% of the largest manufacturing bankruptcies, reflecting what PESP characterizes as vulnerability to debt-heavy ownership structures. Healthcare emerged as another critical sector, with private equity-owned companies accounting for 44% of the largest healthcare bankruptcies in 2025—a particularly sensitive category given the essential nature of healthcare services and employment.
The data suggests that leveraged acquisition models common in private equity transactions may create heightened bankruptcy risk when market conditions tighten or operational challenges emerge. The concentration in consumer discretionary and manufacturing reflects sectors where PE buyers have historically pursued aggressive leverage strategies and cost-reduction initiatives that can constrain operational flexibility during downturns.
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