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ABI: Commercial Chapter 11 Filings Drop 24% in January Y/Y

February 08, 2021, 06:00 AM
Filed Under: Bankruptcy

Commercial Chapter 11 filings in January 2021 totaled 479, a 24 percent drop from the 631 commercial Chapter 11 filings in January 2020, according to data provided by Epiq. The 2,035 commercial filings in January 2021 were 43 percent less than the 3,560 registered in January 2020, according to the American Bankruptcy Institute.

Total, consumer and business filings fell more than 40 percent in January 2021 compared to last year, according to data provided by Epiq. Total filings in January 2021 were 32,298 representing a 44 percent decrease from the January 2020 filing total of 58,160. Consumer filings registered a similar decrease as the 30,263 were 45 percent less than the consumer total in January 2020 of 54,600.

"Continued government relief programs, moratoriums and lender deferments have helped families and businesses offset the challenges of elevated unemployment rates and growing debt loads during the COVID-19 pandemic," said ABI Executive Director Amy Quackenboss. “As further stabilization efforts are considered by Congress, an extension of the eligibility limit for small businesses electing to file for subchapter V under Chapter 11 will provide vulnerable businesses with a proven shield in financially uncertain times.”

The Small Business Reorganization Act of 2019 (SBRA), in effect as of Feb. 19, was enacted to provide Main Street business debtors with a more streamlined path for restructuring their debts. In response to the economic distress caused by the COVID-19 coronavirus pandemic, the “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act; P.L. 116-136) was enacted on March 27, 2020, increasing the eligibility limit for small businesses looking to file under SBRA's subchapter V from $2,725,625 of debt to $7,500,000. The threshold will return to $2,725,625 on March 27, 2021.

Commercial Chapter 11 filings in January 2021 represented a 22 percent increase from the 394 filings recorded in December 2020. January’s commercial filing total represented a 7 percent decrease from the December 2020 commercial filing total of 2,197.

Total filings for January decreased 6 percent compared to the 34,341 total filings in December 2020. Total noncommercial filings for January also decreased 6 percent from the December 2020 noncommercial filing total of 32,144.  

The average nationwide per capita bankruptcy filing rate (total filings per 1,000 population) was 1.25 for January, a slight decrease from the 1.71 rate registered in January 2020. The average daily filing total in January 2021 was 1,700, a 39 percent decrease from the 2,770 total daily filings registered in January 2020. States with the highest per capita filing rates (total filings per 1,000 population) through January 2021 were:

  1. Delaware (4.88)
  2. Alabama (3.06)
  3. Nevada (2.48)
  4. Tennessee (2.45)
  5. Georgia (2.13)

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