Matador Legal » Business Bankruptcy

Business Bankruptcies increase by 40% in May

Matador Legal — Thu, 25 Jun 2009 13:28:37 +0000

United States recorded 7,514 business bankruptcies in May 2009, a rise of 40% over the same month last year. The total number of companies which have filed for Bankruptcy since the last 18 months stands at over 100,000.

The creditors of these companies, mostly Bankers, are more willing to liquidate the company and sell of the assets than wait for two years for the company to recover. This is because the Banks themselves are not in a good state in this recession. Rather than harbor hope of a company recovering and paying of its debt, the banks prefer to liquidate a company and move on.

Two main reasons for these unusual numbers are a sluggish economy with no demand and unavailability of credit from Banking Institutions. According to AACER, this year only 18% of the Business Bankruptcies have been chapter 11.

When one looks at the overall health of the companies in US, these numbers just tell one side of the story, one also has to take cognizance of the businesses which simply fold up without getting into Bankruptcy.

Business Bankruptcies increase in Pittsburgh by 11%

Matador Legal — Tue, 16 Jun 2009 13:01:20 +0000

Business Bankruptcies have risen by 11 % in the first quarter in 2009, compared to 2008. According to American Bankruptcy Institute’s data here, 14,319 business filings were prepared in US. Bankruptcies are usually considered a lag indicator for the economy, as in it lags business life cycles.

Among these 9700 were chapter 7 filings. The Pittsburgh area recorded 163 business bankruptcies, among these 95 were chapter 7 liquidation and 49 were chapter 13 reorganization.

The total bankruptcies across US including business and business have touched 330,477, while Pittsburgh accounting for 3359.

http://pittsburgh.bizjournals.com/pittsburgh/stories/2009/06/15/story3.html?b=1245038400^1844327

Example of Involuntary Bankruptcy petition

Matador Legal — Fri, 12 Jun 2009 09:39:46 +0000

Yesterday, in our post Consumer Bankruptcy: FAQ, we discussed the two types of petitions in bankruptcy: a Voluntary petition, which a debtor files in a court and an involuntary petition where the creditors file for the debtor’s bankruptcy.

The recent case of Bender Shipbuilding & Repair Co. is an example of an involuntary petition. The law states that in the case of an individual or a company with more than 12 creditors, any 3 creditors who owe more than $ 12,300 can file a petition.

Three creditors of Bender Shipbuilding & Repair Co. have files a chapter 7 petition to liquidate the assets of Bender Shipbuilding &Repair Co.

When can a business file for Chapter 13 Bankruptcy?

Matador Legal — Tue, 19 May 2009 14:01:16 +0000

The norm for a business with an entity separate from that of its owners is to either file a Chapter 7 (Liquidation) petition or a Chapter 11(Business Reorganization) petition depending on the future of the business.

Only in the rarest of rare cases can a business file under Chapter 13 (normally reserved for consumer reorganization). Say if you are self employed and are a sole proprietor, have enough income from self employment and other sources to meet your expenses and also pay off the debts as directed by the Bankruptcy court, have unsecured debts less than $336,900 and secured debts under $1,010,650, then you can certainly consider filing for Bankruptcy under the Chapter 13 plan.

Source:

http://biztaxlaw.about.com/b/2009/05/16/can-a-business-file-chapter-13-bankruptcy.htm

http://bizfinance.about.com/od/businessbankruptcy/a/bizbankruptcy.htm