I have spent two decades inside distressed companies, and I have learned that the most dangerous moment is rarely the one where the money runs out. It is the one before that, when the people running the business are still fighting, still believing, still certain that the next call, the next deal, the next quarter will turn it around. That certainty is not a character flaw.
It is the same instinct that built the company in the first place. Entrepreneurs are rewarded for optimism, for persistence, for refusing to accept that a problem cannot be solved. Those traits are real assets.
They become liabilities when the facts change and the leader does not. The numbers show that more leaders are facing that moment now. Total U.S. bankruptcy filings rose 14 percent in the first quarter of 2026 compared with a year earlier, and commercial Chapter 11 filings increased 37 percent, according to Epiq AACER data published by the American Bankruptcy Institute.
Subchapter V elections, the path designed for small businesses, rose 67 percent. Distress is not theoretical. It is arriving in more boardrooms, more quickly.
What I see in those rooms is rarely a leader who has given up. It is a leader who is working harder than ever, applying the playbook that worked before, and missing the fact that the playbook no longer fits the situation. I have sat with CEOs who tried 50 different solutions rather than do nothing.
Their energy was admirable. Their diagnosis was wrong. The hardest thing for a successful leader to accept is that past success can make the present harder to read.
Extract — continue reading at the source.
