Corporate debt issues were significant during the financial crisis in 2008 and 2009. After the end of that crisis, things did smooth out for some time. However, in the last few years, reports have shown that corporate debt and default risks have been soaring once again.
For example, reports from 2025 showed that corporate debt had gotten so significant that the risk of default reached 9.2% for public companies in the United States. This was the single highest total that has been seen since the financial crisis. These reports also showed that this was not necessarily the peak, so debt issues could become even more significant moving forward.
The issue for creditors
This is creating a significant issue for creditors because a business that defaults on its loans may simply not have the financial means to pay back the money that was borrowed. It’s not a matter of negligence, but of inability.
This, in turn, can lead to a cascading effect. As businesses close and employees lose their jobs, spending drops, which impacts the viability of other businesses and could put them at risk of defaulting themselves.
As such, it is very important for creditors to understand exactly what options they have. There are steps that can be taken to secure payment, such as garnishment. If a business does close, assets often have to be liquidated, and creditors are supposed to be paid from the proceeds of this liquidation. After all, even a business without a sustainable level of income may still have significant physical assets, real estate and other things that can be sold to satisfy the debt.
All of this can be complicated, but as the default risk grows higher, creditors need to understand all of their legal options. It can be helpful to work with an experienced attorney.
