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Commercial Chapter 11s Drop 52% in February Y/Y

March 08, 2022, 07:45 AM
Filed Under: Bankruptcy

Commercial Chapter 11 filings in February totaled 203, a 52 percent drop from the 420 commercial Chapter 11 filings in February 2021, according to data provided by Epiq. The 1,420 commercial filings in February 2022 were 28 percent less than the 1,965 registered in February 2021.

Total, consumer and business filings continued their decline in February 2022 compared to last year, according to Epiq’s data. February’s filing total represented a 14 percent decrease from the February 2021 filing total of 31,221. Consumer filings decreased 13 percent, falling to 25,565 in February 2022 from the 29,256 total recorded in February 2021.

February’s commercial bankruptcy filing total of 1,420 represented a 6 percent decrease from the January commercial filing total of 1,505. Commercial Chapter 11 filings totaled 203 in February 2022, a 10 percent decrease from the 225 filings recorded the previous month.

Total bankruptcy filings for February increased 3 percent over January, according to data provided by Epiq. Total filings in February were 26,985, up slightly from the January filing total of 26,200. The total noncommercial filings of 25,565 for February increased 4 percent from the January noncommercial filing total of 24,695.

“With government stabilization programs and lender deferments tapering off, consumers and businesses are navigating an economic landscape that includes rising inflation, worker shortages and growing supply chain challenges,” said ABI Executive Director Amy Quackenboss. “Congressional consideration of extending or permanently making the expanded eligibility limit of small businesses electing to file for subchapter V under Chapter 11 before it expires on March 27 would provide a reliable 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, more than 3,000 debtors have elected to file under 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 debt eligibility limit for small businesses looking to file under the SBRA’s subchapter V from $2,725,625 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 threshold is set return to $2,725,625 on March 27, 2022, without further congressional action.

The average nationwide per capita bankruptcy filing rate (total filings per 1,000 population) was 1.03 for February, a decrease from the 1.25 rate registered in January. The average daily filing total in February 2022 was 1,420, a 14 percent decrease from the 1,643 total daily filings registered in February 2021. States with the highest per capita filing rates (total filings per 1,000 population) in February 2022 were:

  1. Alabama (2.94)
  2. Tennessee (2.35)
  3. Georgia (2.17)
  4. Mississippi (1.99)
  5. Nevada (1.83)

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