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Commercial Chapter 11s Drop 53% in January Y/Y

February 07, 2022, 07:42 AM
Filed Under: Bankruptcy

The 1,499 bankruptcy commercial filings in January were 27 percent fewer than the 2,049 registered in January 2021, according to data provided by Epiq. Commercial Chapter 11 filings in January totaled 223, a 53 percent drop from the 479 commercial Chapter 11 filings in January 2021.

Total, consumer and business filings continued their decline in January 2022 compared to last year. Total filings in January 2022 were 26,195, representing a 19 percent decrease from the January 2021 filing total of 32,312. Consumer filings decreased 18 percent, falling to 24,696 in January 2022 from 30,263 in January 2021.

January’s commercial filing total in January represented an 11 percent decrease from the December 2021 commercial filing total of 2,197. Commercial Chapter 11 filings in January represented a 28 percent decrease from the 310 filings recorded in December 2021. Total filings for January decreased 6 percent from the 27,980 total filings in December 2021. Total noncommercial filings for January also decreased 6 percent from the December 2021 noncommercial filing total of 26,304.

“Though filings continue to decrease, consumers and businesses are faced with less government relief, fewer lender deferments, rising inflation, worker shortages and supply chain challenges,” said ABI Executive Director Amy Quackenboss. “With mounting economic uncertainties amid the ongoing pandemic, congressional consideration of extending or permanently making the expanded eligibility limit of small businesses electing to file for subchapter V under Chapter 11 will provide a proven path for small businesses to successfully restructure, reduce liquidations and save jobs.”

Since the Small Business Reorganization Act of 2019 (SBRA) became effective on Feb. 19, 2020, to provide Main Street business debtors with a more streamlined path for restructuring their debts, 2,900 debtors have elected to file for subchapter V of Chapter 11. 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. Congress extended the limit last year with the enactment of the “COVID-19 Bankruptcy Relief Extension Act of 2021,” but the thresholdis set return to $2,725,625 on March 27, 2022, without congressional action.

To examine potential restructuring trends that may surface in 2022, ABI and PwC are hosting a special free abiLIVE webinar Feb. 8 at 12:30 p.m. ET. The panelists, who include Rachel Albanese of DLA Piper, Lorie Beers of Cowen and Company, Steven Fleming of PwC US and David Tyburski of PwC US, will also explore industries to watch and will hold a live Q&A session with the audience. ABI Editor-at-Large Bill Rochelle will moderate the session. To register, click here.

The average nationwide per capita bankruptcy filing rate (total filings per 1,000 population) was 1.25 for January, a decrease from the 1.71 rate registered in December 2020. The average daily filing total in January 2022 was 1,310, a 23 percent decrease from the 1,701 total daily filings registered in January 2021. States with the highest per capita filing rates (total filings per 1,000 population) in January 2022 were:

  1. Alabama (2.88)
  2. Tennessee (2.26)
  3. Georgia (2.19)
  4. Mississippi (1.85)
  5. Nevada (1.76)

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