Through the first half of 2026, 372 larger US companies filed for bankruptcy protection, the highest first-half total since 2010, yet credit markets remained unusually calm. The spread on the five-year CDX North American High Yield index tightened to about 304 basis points by end-June from 406 basis points in March, while the ICE BofA US High Yield Index option-adjusted spread stood near 269 basis points in mid-July, well below its 20-year average of roughly 490 basis points. Industrial companies led the filings with 50 petitions, followed by 35 from consumer discretionary and 26 from healthcare, while small business bankruptcies surged 50% year-over-year to 1,663 filings. Distressed-debt and special-situations funds have amassed more than $100 billion in new capital over the past two years, with the ten largest funds raising nearly $50 billion more, positioning them to buy troubled assets at steep discounts. However, payment-in-kind provisions in private credit have more than doubled since 2021 to 6.4% of loans, suggesting real distress may be closer to 6%, roughly triple the publicly reported default rate, and restructuring attorneys expect a wave of large Chapter 11 cases in the second half of the year.