Get Ready for Bankruptcies to Explode! - Private Equity Is Failing (Video)

In this 10 September 2026 published video, host Michael Bordenaro talks about the claim that private equity-backed corporate bankruptcies are exploding is grounded in real-world market metrics. Despite accounting for roughly 7 percent of the U.S. economy, private equity (PE) portfolio companies have accounted for roughly 50 percent to 54 percent of all large U.S. corporate bankruptcies with liabilities exceeding $500 million. A combination of prolonged high interest rates, aggressive debt loading, and declining consumer discretionary spending has pushed heavily leveraged businesses to an operational breaking point. 

The compounding failures stem from core mechanisms that work well during low-interest eras but collapse when capital becomes expensive. Sponsors buy companies using minimal equity and massive debt. The acquired business is forced to absorb the debt liabilities. Floating-rate debt costs ballooned when the Federal Reserve raised interest rates. Private equity firms sell off the underlying corporate real estate for quick cash. The business is then forced to pay high rent on property it originally owned. This structure directly accelerated the downfalls of Toys R Us and Red Lobster. Sponsors force struggling businesses to issue new debt just to pay out cash dividends to the PE firm. Ongoing management and monitoring fees extract cash up until the moment of default. 

Because traditional banks tightened credit standards, private equity heavily leaned on the shadow banking sector and private credit funds to sustain their businesses. This has triggered secondary cracks across the credit landscape. Fitch Ratings reported the U.S. private credit default rate reached a record high of 6.0 percent in mid-2026. Over 65 percent of private credit defaults are occurring via “soft defaults”—such as distressed debt exchanges and forced maturity extensions—which temporarily mask the scale of the crisis from public court records. The total number of unsold companies stuck in private equity portfolios has swollen to over 32,000, choking off the liquidity and cash returns normally sent back to institutional investors. 

https://youtu.be/IUPcD8FbmEA