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Commercial Chapter 11s Jump 29% in 2020, Flat in December

January 13, 2021, 08:12 AM
Filed Under: Bankruptcy

Commercial Chapter 11 filings increased 29 percent during calendar year 2020 as the total of 7,128 climbed past the 5,519 recorded during calendar year 2019, according to data provided by Epiq. The 2020 commercial Chapter 11 filing total was the highest total since the 7,789 filings registered in 2012, according to the American Bankruptcy Institute.

Total commercial filings declined. The 32,506 business filings in calendar year 2020 represented a 17 percent drop from the 39,050 recorded in calendar year 2019.

Total bankruptcy filings during calendar year 2020 decreased 30 percent from 2019 as the government and lenders offered stabilization measures in response to the economic challenges resulting from the COVID-19 pandemic. Total filings fell from 757,634 in 2019 to 529,071 filings during calendar year 2020. Annual bankruptcy filings last registered a similar total in 1986, with 530,438 total filings, and the 30 percent drop from 2019-20 is the second-largest percentage decrease since the 70 percent drop in filings recorded in 2005-06. That decrease was the result of the implementation of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which prompted total bankruptcies to rise to 2,078,415 ahead of its enactment then fall to 617,660 total filings in 2006.

Total consumer filings were 496,565 nationwide for calendar year 2020, 31 percent fewer than the 718,584 total filings during 2019. The 2020 consumer filing total is the lowest since the 495,553 filings registered in 1987. Chapter 13 filings decreased 46 percent, as the 152,828 Chapter 13s in 2020 were down from the 282,712 filings in 2019.

“Continued government relief programs, moratoriums and lender deferments have helped families and businesses weather the economic challenges over the past year resulting from the COVID-19 pandemic,” said ABI Executive Director Amy Quackenboss. “While stabilization programs have achieved their intended effect in keeping families and businesses afloat amid the pandemic, bankruptcy provides a proven economic shelter for companies and consumers facing mounting financial distress.”

The 2,186 total commercial filings in December 2020 represented a 25 percent decrease from the 2,906 total commercial filings during the same period in 2019. Commercial Chapter 11 filings in December 2020 edged up by one filing, to 393 from the 392 commercial Chapter 11 filings in December 2019.

Total bankruptcy filings for the month of December decreased 35 percent to 34,307 in 2020 from the 53,066 filings in December 2019. Similarly, the 32,121 total noncommercial filings for December represented a 36 percent decrease from the December 2019 noncommercial filing total of 50,160.

The average nationwide per capita bankruptcy filing rate for calendar year 2020 decreased slightly to 1.71 (total filings per 1,000 population) from the 2.44 rate during 2019. States with the highest per capita filing rates (total filings per 1,000 population) through December 2020 were:

Alabama (3.85)
Delaware (3.62)
Tennessee (3.39)
Nevada (2.94)
Mississippi (2.85)

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