WILMINGTON, Delaware (Reuters) — Business bankruptcy filings in the United States dropped 24 percent
in 2013 to their lowest level since at least 2006, according to a
report on Monday.
Overall, bankruptcies by businesses and individuals combined fell 13
percent, said the report, released by the American Bankruptcy
Institute.
Bankruptcy filings by businesses and individuals spiked as the
United States entered recession in 2007. The numbers have fallen
steadily in recent years as the U.S. Federal Reserve has kept
borrowing costs low.
Monday's report, which was compiled for the ABI by bankruptcy claims
processor Epiq Systems Inc, said 44,111 businesses filed for
bankruptcy in 2013, down from 57,964 in 2012. Epiq's data goes back
to 2007.
Total filings by businesses and individuals fell to 1.03 million,
the report said, from 1.19 million in 2012. The number of filings
fell in every state but rose by 7 percent in Puerto Rico, which has
been hit by a prolonged recession.
The average number of filings by businesses and individuals over the
past five years was 1.32 million per year. That historically low
level is partly the result of a 2005 law that made it harder for
individuals to declare bankruptcy. In the 10 years leading up to
enactment of the law, filing averaged 1.5 million per year,
according to the ABI.
Teresa Kohl, a bankruptcy expert at SSG Capital Advisors, an
investment bank that specializes in corporate restructuring, said
she expected businesses to continue to avoid filing for bankruptcy,
even if it might be in their interests to do so.
"Bankruptcy is still viewed as expensive proposition and it's
something that people tend to avoid at all costs," Kohl said. "I
don't think in 2014 there is going to be any dramatic change."
For 2014, she said she expected to see healthcare companies under
stress due to regulatory changes and agriculture businesses struggle
as raw material costs increase. The number of business failures
could grow if interest rates rise sharply, she said.
According to the report, the U.S. bankruptcy court in Wilmington,
Delaware, led the country in business Chapter 11 filings in 2013.
Among the large filings were battery maker Exide Technologies,
plug-in hybrid car maker Fisker Automotive and the Edwin Watts Golf
Shops chain.
Big U.S. businesses tend to incorporate in Delaware, which gives
them the option to use the U.S. bankruptcy court there if they need
protection from creditors.
The U.S. bankruptcy court in Los Angeles led the country in Chapter
11 business filings between 2010 and 2012. Its counterpart in
Manhattan, also among the busiest in the country, last led in
Chapter 11 business filings in 2009.
(Reporting by Tom Hals; editing by Steve Orlofsky)
