News
Bankruptcy & Creditor’s Rights Practice Co-Chair Randy Klein is quoted in “Bankruptcy in 2026 to Be Guided by Policy Change, Fraud Scrutiny,” published in the Jan. 2, 2026, edition of Bloomberg Law.
The article concerns the mix of trends in the corporate restructuring world expected in 2026, with increased activity expected in industries affected by shifting political landscapes and greater scrutiny into potential pre-bankruptcy fraud.
The article also states that inflation and delayed tariffs, as well as interest rate fluctuations, are likely to prompt more bankruptcy filings in 2026. Meanwhile, the popular liability management exercise trend isn’t likely to go away, especially as the cost of Chapter 11 continues to rise.
Additionally, it states that creditors will ramp up efforts to protect themselves against potential fraudulent activities — a byproduct of two high-profile collapses in 2025 from auto parts supplier First Brands Group LLC and subprime auto lender Tricolor Holdings LLC amid widespread allegations of data manipulation and double-pledging collateral that touched major lenders.
The connection between chasing deals and monitoring collateral can lead to more probes into bankrupt companies.
“It can be correlated to easy money,” Randy Klein is quoted as saying. “It leads to corners getting cut in underwriting.”
In terms of industries that will be affected most in 2026, Randy says in the article that the consumer credit wall is going up, leading to a tightening in spending that hits industries such as retail and automotive.
“Everything is getting more expensive for most people,” he said. He noted that sectors that allow loan-to-own programs, such as automotive and furniture, may see increased distress due to consumer ties.
As for the real estate industry, Randy says in the article: “There’s a lot of softness in those large market office space situations. There will be some shakeout there.”
Finally, Randy comments on the topic of fraud. As Tricolor, First Brands, and lease-to-own financier FlexShopper Inc. faced allegations in their 2025 bankruptcies of fraudulent loan documents, banks called for reviews of their portfolios to mitigate risks. That effort is likely to seep into the new year as creditors look to avoid similarly messy bankruptcy cases.
“Fraud tends to come in waves,” Randy said. “You’ve got more money and more players in the industry chasing deals.”
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