The destruction caused by the nation’s economic woes is still readily apparent in the U.S. business sector. The Administrative Office of the U.S. Courts has released that business bankruptcy filings hit 55,021 in June, up 63% from the 12-month period ending June 2008. Another sour note is that total business and non-business third quarter filings were 381,073, which is the highest total of any quarter so far this year. It also represents the largest amount of filings for a quarter since December 2005, before the implementation of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA).
For the 12-month period ending June 30, 2009, total bankruptcy cases have increased 35% over last year.
According to the Judiciary’s figures, Chapter 11 bankruptcy filings have increased 91% from the 12-month period ending June 2008. Filings increased from 7,293 to 13,951. Chapter 7 filings have also seen a massive surge, increasing 47% from 615,748 for the 12-month period ending June 2008 to 907,603 for the 12-month period ending June 2009.
The news is also stark for the United States’ 25 million small businesses. According to Equifax Inc., from June 2008 to June 2009, bankruptcy filings for the small business sector has soared upwards 81%. Equifax analyzed its small business database and found that there were 5,712 small business bankruptcies in June last year and that increased to 10,339 this June.
“The data shows that the economic pain is continuing for small businesses across the country,” said Dr. Reza Barazesh, head of North American research for Equifax’s Commercial Information Solutions division. “While it may not be quite as intense in some areas as what we saw earlier this year, we’re still seeing hefty increases in the number of bankruptcies in a lot of major metro areas.”
From Equifax’s analysis, California is the hardest hit state for bankruptcies, being home to ten of the 15 metro areas that had the most commercial bankruptcy filings in June. Los Angeles, the Riverside/San Bernardino area and the Sacramento metro led the nation in small business bankruptcy filings. Equifax unearthed some surprising figures in its analysis, including the Charlotte-Gastonia-Concord metropolitan area of the Carolinas, which didn’t appear in the top 15 in small business bankruptcy filings a year ago, but had surged to the nation’s fourth most in June.
The top five metropolitan areas with the least amount of small business bankruptcy filings were Springfield, MA; Lafayette, LA; Cedar Rapids, IA; Charleston, WV; and Hagerstown-Martinsburg, MD-WV.
Because of the dramatic increase in bankruptcies over the last twenty four months, the Judiciary is facing a deluge in workload. The branch has approached Congress to approve additional judges. At the end of the second quarter, Judge Barbara Lynn, a district court judge in the Northern District of Texas and chair of the Judicial Conference Committee on the Administration of the Bankruptcy System, urged members of the House Judiciary Subcommittee on Commercial and Administrative Law to back the recommendations for additional bankruptcy court judges. The Judicial Conference has previously sought the authorization for 24 additional judgeships in 1999, 36 additional judgeships in 2003, 47 additional judgeships in 2005 and following the enactment of BAPCPA, an additional 24 permanent judgeships.
Matthew Carr, NACM staff writer. Follow us on Twitter @NACM_National