Bankruptcy Insurance Case Studies: Lessons from 2025

Why Bankruptcy Insurance Case Studies Matter 

Bankruptcy insurance case studies show how creditors can protect receivables when major customers fail. In 2025, Joann and At Home both filed Chapter 11, leaving suppliers, lenders, and partners exposed to heavy losses. 

These cases illustrate a recurring truth: unsecured creditors face long waits and limited recovery in court. Insurance changes that outcome by turning uncertain claims into predictable payouts. 

Case Study 1: Joann 

The filing: Joann (formerly Jo-Ann Fabrics) entered Chapter 11 in 2025, aiming to restructure about $500 million in debt. The retailer closed stores and trimmed operations to reduce obligations. 

Impact on creditors: 

• Vendors supplying fabric, craft goods, and logistics faced unpaid invoices. 
• Unsecured creditors had little priority in the repayment queue. 
• Smaller suppliers were particularly strained, with cash flow tied up in receivables. 

Lesson learned: With bankruptcy insurance, creditors would have secured reimbursement soon after default. Instead of absorbing losses, insured suppliers could maintain liquidity while insurers pursued claims through the court process. 

Case Study 2: At Home 

The filing: In June 2025, At Home filed Chapter 11, citing tariffs, higher borrowing costs, and weak consumer demand. The company sought $200 million in debtor-in-possession financing to continue operations. 

Impact on creditors: 

• Furniture and décor suppliers faced significant exposure. 
• Distributors reliant on At Home’s large orders saw major disruption. 
• Many creditors risked deep write-offs as unsecured claims. 

Lesson learned: Bankruptcy insurance would have delivered timely reimbursement, preventing liquidity strain and allowing suppliers to keep operations stable while restructuring unfolded. 

What These Case Studies Reveal 

Across both Joann and At Home, the creditor challenges looked the same: 

• Customer concentration: Heavy reliance on a few big buyers magnifies risk. 
• Unsecured status: Trade creditors often sit at the bottom of the repayment hierarchy. 
• Delayed recovery: Court proceedings stretch for months or years. 
• Limited payout: Final distributions can be just pennies on the dollar. 

Bankruptcy insurance doesn’t prevent Chapter 11, but it ensures creditors recover most of what they are owed, fast. 

How Insurance Reshapes Recovery 

The recovery process looks different with coverage: 

1. Filing: Customer enters Chapter 11 and defaults. 
2. Claim: Insured creditor submits to the insurer instead of waiting on the court timeline. 
3. Payment: Insurer reimburses 80–90% of the insured receivable. 
4. Subrogation: The insurer assumes creditor rights in bankruptcy court. 

The creditor avoids the waiting game and preserves working capital. 

Benefits Highlighted in Case Studies 

• Predictable recovery when major customers fail 
• Reduced write-offs and lower allowances for doubtful accounts 
• Financing support, as insured receivables remain strong collateral (see our insurance for lenders overview) 
• Stability for operations even during large customer reorganizations 
• Risk diversification in industries where concentration is high 

For more context, our guide to trade credit insurance explains how coverage applies across industries and markets. 

FAQs 

1. What do bankruptcy insurance case studies show about creditor recovery?
   That insured creditors recover quickly and reliably, while uninsured creditors face delays and uncertainty.
2. How much of a loss does insurance typically cover?
   Most policies reimburse 80–90% of eligible receivables tied to bankruptcy defaults.
3. Are only large bankruptcies relevant?
   No. Mid-market and small company filings can be just as disruptive. Insurance applies across the spectrum.

Summary 

Bankruptcy insurance case studies like Joann and At Home in 2025 highlight the value of coverage: faster recovery, reduced write-offs, and stronger financial stability for creditors. 

Contact us today to learn how we can help protect your business. 

Disclaimer:

This blog post is meant to be informative and provide helpful tips and insights into credit insurance policies.  It is not meant to supersede any policy requirements.  Please consult your credit insurance policy for all requirements including claim filing deadlines and required documentation.

Since 2004, Securitas Global Risk Solutions, LLC (“Securitas”) has helped clients develop credit and political risk transfer solutions that provide value on numerous levels. As an independent trade credit and political risk insurance brokerage, Securitas is focused on developing comprehensive solutions that meet the needs of clients, ensuring a complete understanding of policy wording and delivering excellent responsive service.