Updated April 2026
Want these insights delivered straight to your inbox? Sign up for our newsletter.
Lower Middle Market Bankruptcy by Industry
Since 2016, Newpoint has tracked voluntary Chapter 11 filings in the lower middle market — companies carrying $1 to $10 million in liabilities — and organized that data by industry to identify where financial distress concentrates, migrates, and accelerates. The result is the Lower Middle Market Bankruptcy by Industry Index, a proprietary longitudinal dataset built from nearly a decade of case-level filing activity. Unlike broad bankruptcy statistics that aggregate across all company sizes, this index is purpose-built for the $5–$50 million revenue segment, where distress signals behave differently than they do in large corporate restructurings. Newpoint publishes a quarterly summary of this data as part of its lower middle market intelligence series, giving lenders, attorneys, and advisors a clearer view of where stress is building — before it becomes a crisis on their balance sheet or in their portfolio. Newpoint publishes this data quarterly as part of its lower middle market intelligence series.
Trends since 2016
2026 Trends – Q1
The current environment for U.S. lower middle market businesses ($5 – $50MM revenue segment) presents both challenges and opportunities. Consumer spending remains a relative bright spot — February 2026 retail sales came in at $738.4 billion, up 3.7% year-over-year – though the spending outlook remains bifurcated, with upper-income households driving the majority of growth. M&A activity remains sluggish, as smaller firms continue to struggle with a higher cost of capital and a valuation gap that has yet to fully close. Access to capital remains constrained — the Q1 2026 SLOOS showed 8.9% of banks on net still tightening C&I lending standards for small firms, though this marks a meaningful improvement from the 18% net tightening recorded at the cycle peak in Q2 2025. Additionally, uncertainty over inflation and geopolitical uncertainty is casting a pall over markets, with outcomes yet to be determined and fully reflected in economic data.
Leading Economic Indicators
Below is a chart showing how these figures have moved over time:
Notably, within the Institute for Supply Management (ISM) survey data, 16 of 18 manufacturing industries expect revenue improvement (survey 4.4% net increase) in 2026, with only Plastics & Rubber Products and Electrical Equipment, Appliances & Components not forecasting revenue growth. For services industries, there is a similar trend with a forecast 4.6% revenue growth outlook, with only Agriculture, Forestry, Fishing & Hunting and Management of Companies & Support Services not anticipating revenue growth.
Bankruptcy Filing Trends
For voluntary Chapter 11 filings in the $1 – $10MM liabilities range tracked by Newpoint, the growth in filings from 2024 to 2025 was a substantial 93% increase, from 934 to 1,809 cases. Year-to-date Mar. 31, ’26 shows 710 filings in this category; if that trend were to hold, there would be an estimated 2,840 filings, or a 56% growth YOY. Focusing on specific industries, we highlight the following industries of concern: construction; retail trade; manufacturing; transportation & warehousing; and healthcare, most notably:
- Key drivers include elevated prices, higher borrowing costs, and broader inflation and geopolitical uncertainty
- Additional industry-specific risk remains elevated across construction, manufacturing, retail & restaurant, and health care – industries of focus and attention for stakeholders heading into Q2’26, in line with Newpoint’s client feedback and observations
Special Assets Group Officer (SAGO) Hiring Index
The SAGO Report — Special Assets Group Officer — is a proprietary leading indicator developed by Newpoint to track early-stage credit stress in the banking sector. When lenders anticipate deterioration in their commercial portfolios, they hire ahead of it: special assets officers are the professionals banks deploy to manage problem loans, workouts, and recoveries. By systematically tracking open positions for these roles across lenders operating in the 13 largest U.S. cities — organized into three geographic regions — Newpoint has built a hiring-activity proxy for where banks expect distress to emerge. Collected continuously since 2022, the SAGO dataset has proven to be a reliable early signal, often surfacing portfolio stress quarters before it appears in traditional credit metrics or public filings. Newpoint publishes this data quarterly as part of its lower middle market intelligence series.
Trends Since 2023
Bank and Special Assets Perspectives
Coincident with the uptick in core lower middle market bankruptcy filings and distortions from tariff and supply chain issues in early/mid 2025, there has been an uptick in special assets officer job postings across regions. Newpoint tracks these listings through proprietary search tools. As shown in the chart below, there was a spike of postings for special assets officers in Q2’25 and Q3’25, with a taper going into Q1’26. Newpoint continues to monitor this proprietary data to determine whether it is a rangebound issue or something that will correct itself in coming quarters.
Newpoint tracks regional banks with significant C&I loan exposure as these lenders tend to have loan portfolios more closely aligned with core lower middle market borrowers. Looking beyond the too big to fail cohort, below re aggregated problem C&I loan statistics by selected problem Federal Reserve regions.
Footnote: $ amounts in 1,000s; Figures do not total, represent data from bank holding companies with headquarters location as link to Fed District
This table above highlights the fact that lower middle market economic uncertainty is not isolated by region or industry. Newpoint Advisors Corporation is a North American financial advisory firm dedicated to improving troubled and financially underperforming businesses with revenues of $5 – 50MM for a fixed fee and on a fixed timeline. Since 2013, Newpoint has recovered $1,918,000,000 in debt and saved 15,754 jobs.
We update this data quarterly. For the latest results right in your inbox sign up for our email newsletter.
← Insights & News