Joel R. Glucksman
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201-896-7095 jglucksman@sh-law.comFirm Insights
Business Bankruptcies Declined in 2012 and Q1 of 2013
Author: Joel R. Glucksman
Date: May 28, 2013
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The number of high-profile corporate bankruptcies that have made national headlines in recent months suggests that business bankruptcies are on the rise. However, a new analysis shows that the opposite is true.
According to new research compiled by Credit2B, a Smyyth company that specializes in credit and accounts receivable management technology, business bankruptcy filings fell for calendar year 2012 as well as the first quarter of 2013.
Relying on data from both the Credit2B database and the Administrative Office of the U.S. Courts, the company found that the number of companies seeking bankruptcy law protection in 2012 fell 16 percent to 40,075, compared to the 47,806 bankruptcies filed in 2011. Further, the number of bankruptcy proceedings initiated during the first quarter of 2013 also declined, tumbling 22 percent to 8,512 from the 10,998 filings during the same period in 2012.
Further, the analysis debunked myths that Sandy, the second-costliest hurricane in U.S. history, led to a spike in business bankruptcies. Credit2B confirmed that while the catastrophe hit businesses hard, the available short-term data did not denote any significant increase in filings in the Northeastern seaboard.
“A review of Q4 2012 and Q1 2013 business bankruptcy statistics from the four courts that cover the regions most affected by ‘Superstorm Sandy’ failed to show any meaningful increases in filings,” said Bob Carbonell, Credit2B executive vice president and chief credit officer.
Carbonell added that research revealed insurance claims and FEMA assistance were sufficient in helping most companies avoid financial distress severe enough to warrant filing for bankruptcy.
Although corporate bankruptcy filings have declined, it appears that there has been an uptick in the number of municipalities seeking Chapter 9 protection. The San Diego Source reported that the pending bankruptcy cases of Stockton and San Bernardino have already triggered a wave of uncertainty and anxiety in the municipal bond market, and speculation that Detroit may be the next large city to seek protection is calling more attention to these once-rare municipal proceedings.
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