Companies have also incresingly been grappling with high rising debts - driven by  high interest rates that caused borrowing costs to spike.  

In 2024, 686 companies filed for bankruptcy, up 8 percent from 2023 - and almost more than 2021 and 2022 combined. It also marks the most filings since 2010, according to data from S&P Global Market Intelligence.

In addition last year, more companies tried to avoid bankruptcy through out-of-court actions, with these efforts outnumbering actual bankruptcies two to one, according to Fitch Ratings.

One of the year's biggest bankruptcies came from Party City, which filed for Chapter 11 for the second time in just over a year. 

The company announced it would close all 700 stores, blaming inflationary pressures and Americans cutting back on spending. The reasons mirror those of other struggling companies. 

Other major names like Tupperware, Red Lobster, and Spirit Airlines also filed for bankruptcy in 2024. Even popular vodka Stoli filed for bankruptcy in November. 

'The persistently elevated cost of goods and services is weighing on consumer demands,' said Gregory Daco, chief economist at EY, told the FT.  He said it was hitting lower-income families the most. 

While the Federal Reserve has started lowering interest rates, relief for businesses will be limited. Forecasts suggest only a half-point rate cut in 2025, keeping pressure on struggling companies.

Between 2021 and 2022 - when borrowing costs were low and Americans were still spending stimuls checks -  only 777 bankruptcy filings were recorded.

That is a a stark contrast to the 636 bankruptcy filings in 2023 and the 686 in 2024. 

At least 30 of last year's bankruptcy filings involved firms with over $1 billion in liabilities, underscoring the scale of the financial strain.    

A rising number of businesses have turned to 'liability management exercises' -financial tactics aimed at avoiding bankruptcy by restructuring their debts. 

While these moves have become increasingly common, experts warn they are often just a temporary fix and can lead to companies eventually filing for bankruptcy anyway.