When Michael Fisher’s law practice gets busy, it usually means other companies are struggling. And that’s what Fisher, a bankruptcy attorney in Hanover, started seeing a little over two years ago in the fall of 2023. In one week, he recalls four businesses reaching out to schedule consultations, when previously he might have done half a dozen in a whole year. He had to bring on an associate for the first time in 11 years.
“It was almost like everyone woke up from a post-COVID lull,” he says.
The number of businesses filing for bankruptcy in NH has more than doubled in the past two years, a trend bankruptcy lawyers and other experts attribute to a mix of factors including high interest rates, inflation, tariffs, COVID-era loans coming due and post-pandemic shifts in consumer behavior.
New Hampshire is still seeing fewer businesses file for bankruptcy than in the mid-2010s. But bankruptcy attorneys and other observers say the uptick is notable and could have implications for the wider economy.
Mark Williams, a master lecturer in finance at the Boston University Questrom School of Business, says a large increase in bankruptcies could lead to job losses, reduced consumer spending and ultimately pullbacks in lending from banks.
“That’s the concern, that these bankruptcies spur other slowdowns in the economy,” he says.
Trending Upwards
The rise in NH bankruptcies is part of a national trend. According to data from the U.S. court system, business bankruptcy filings were up 5.6% in the year ending Sept. 30.
In NH, 88 businesses filed for bankruptcy during that time, compared to 62 the year prior and 40 the year before that.
“I’m seeing more bankruptcies, but I’m also seeing a lot more out-of-court workouts” that don’t get included in the official numbers, says Peter Tamposi, a bankruptcy attorney in Nashua.
Steve Ciccone, a professor of finance at the University of NH, says the Granite State tends to perform a little better than the country when it comes to commercial bankruptcies, but still follows the same general trends.
“New Hampshire tends to be driven by small businesses, which you would think would be fairly susceptible to fluctuations in the economy, and I think that’s generally true,” he says. “The good thing that New Hampshire has is a very high average salary per household, so that tends to keep these small businesses afloat.”
Still, Ciccone says various economic headwinds made things more challenging for many businesses in recent years. Higher interest has made it more expensive to borrow. Inflation has driven up costs. Competitive pressures have squeezed profit margins in some industries. And some pandemic-era shifts in consumer behavior have stuck around.
“For example, people got used to online shopping,” affecting brick-and-mortar retailers, he says.
Some firms are also feeling the bite of tariffs as they pay more to import goods, says William S. Gannon, a bankruptcy attorney in Manchester.
“The last two cases I filed were rea-lly both triggered by the Trump tariffs,” he says.
One of those was Annalee Dolls, which filed for a Chapter 11 reorganization last spring. “It was simply not possible, in the judgment of management, which were very competent, savvy people, to sell the product at what they needed to sell it at, given the cost of goods brought into the country,” Gannon says.
Post-Pandemic Pain
Some attorneys are also seeing signs of what Williams, the Boston University lecturer, calls a “post-COVID hangover.”
“To get businesses through COVID, there was a lot of federal funding available, which were incentives if you kept employees on and so forth,” Williams says. “And a lot of that funding has dried up.”
The Paycheck Protection Program loans that helped businesses make payroll early in the pandemic were mostly forgiven. But plenty of businesses took on additional loans from the U.S. Small Business Administration to tide them over, thinking revenues would rebound once the pandemic ended, Fisher, the Hanover attorney, says.
Then, when business never returned to pre-COVID levels, they were left with hundreds of thousands of dollars or more in loans they couldn’t pay back.
“It’s sort of this crazy downward spiral that these companies have gotten themselves into,” Fisher says, adding that if they had gone out of business three or four years ago “they and often their personal guarantors wouldn’t be in quite as deep a hole now.”
But when people pour their whole lives into a small business, giving up can be emotionally fraught. “They don’t want to say that they failed,” he says of what guides their decisions. “They don’t want to have to look at a family member who invested or a neighbor who invested and say, ‘This didn’t work.’ They want to do anything and everything to keep it going. And sometimes, the best move is to pull the plug.”
Tamposi says that in the rush to save the economy from cratering, the SBA was giving out economic-disaster loans that “were not carefully underwritten, if at all.”
“A lot of people credit it with really preventing a massive recession,” he says, but now the bill is coming due. “It was an artificial life support for a year or two for some companies,” he says. “But fundamentally, those companies are unable to survive post-COVID, and now they’ve either closed their doors or filed bankruptcy.”
Tamposi says another major driver he’s seen in recent bankruptcies are so-called “merchant cash advance” (MCA) companies, which provide cash up front in exchange for a portion of future sales. Tamposi says it can seem like an easy way to get an immediate infusion of cash, especially for companies that have trouble qualifying for bank loans, but he’s seen businesses quickly get trapped.
Because they’re not regulated like traditional loans or subject to the same disclosure laws, Tamposi says the terms of merchant cash advances can be extremely difficult to understand. And the fees are astronomical, equating to interest rates of anywhere from 20% to 100% or more, he says, often deducted directly from the business’s bank account.
“By the time people come see me, they’re really pretty banged up,” he says. “Their cash has been drained out of them. They’re missing payroll, they’re unable to make other payments, and they’re being sued. … I literally see one new client a week driven here by MCA debt.”
Most bankruptcy attorneys and finance experts interviewed for this story expect bankruptcies to continue to rise in 2026. As of November, Fisher had eight to 12 commercial cases that could be filed in the coming months, when in a typical year he might have one.
Tamposi notes that an increase in NH’s homestead exemption, which protects home equity from most creditors, takes effect in 2026, going from $120,000 for an individual and $240,000 for a couple to $400,000 and $550,000, respectively. That could prompt an uptick in bankruptcy filings by people who had previously feared their home being taken over business-related debts, he says.
“They’re faced with potentially losing their home if their business fails, which is sad to see,” he says. “So, I predict that early next year, we’ll see a lot more individual bankruptcy filings in Chapter 7 and Chapter 13 because of the increased homestead value.”
Ciccone of UNH also expects business bankruptcies to continue rising for a little while before the trend reverses at some point in the next few years as interest rates come down, inflation lowers and businesses adjust to the post-COVID landscape. “I think there’s going to be some kind of sorting out in the economy,” he says.
Don’t Wait Until a Crisis
Attorneys emphasize that bankruptcy can often be avoided, but it’s important that business owners seek help early.
Joseph Foster, a director at McLane Middleton and chair of the firm’s bankruptcy practice, says there are often other ways to work things out with creditors before it’s too late. “If you see that you’re having financial difficulties, seek out appropriate professionals earlier rather than later,” he says. “Because as you get closer to a point where you’re really in a crisis situation, it would be difficult to remedy things.”
Fisher says banks, the IRS and the SBA usually have people on staff who can work with companies on repayment options. They’d generally rather get paid than see the company go under. But like Foster, he says early intervention is key.
“The people that come to me and say, ‘I can’t make payroll on Friday,’ and it’s Thursday afternoon, there’s a limited number of options I have at that point,” he says.
Most business bankruptcies are filed under Chapter 7, in which a company liquidates its assets to pay what it can before shutting down. Chapter 11 reorganization allows a company to restructure its debts and emerge from bankruptcy to keep doing business, though Gannon cautions it can be an expensive and complicated process.
“Unless you really can see turning the business around and making money, it may not be a worthwhile expenditure,” he says.
Gannon says the ideal time to file for Chapter 11 bankruptcy is when the worst has passed and the business is on the verge of turning around, so that income can go toward paying off its reorganized debts. But it’s hard to pinpoint exactly when you’re at the bottom of that ‘V,’ he says.
“I like to go a little ways up the right leg [of the V],” he says. “You know, you have two, three months of good, solid operations. The business things you did to turn it around have worked, seem to be working, and that’s when you file.”
Ultimately, says Edmond Ford, an attorney at Ford, McDonald & Borden in Manchester and a Chapter 7 bankruptcy trustee, one of the most important things in avoiding bankruptcy is to have good accounting and know your business’s finances well.
That may seem obvious, he says. But he’s seen many people go into business because they love what they do—say, carpentry—only to neglect managing the business itself. “I think especially in the small business world, it’s far more common for businesses to fail because they don’t have a firm grasp of what the numbers of the business actually are,” Ford says. “That’s far more common than macro-economic issues.”
