Business Bankruptcies Booming, Courts Report
Much attention has been paid by the media and others to the recent rapid rise in consumer bankruptcies. Less attention, however, has been paid to the even faster rise in business bankruptcies. Well, let’s look at some of the numbers, just released by the Administrative Office of the US Court system.
In 2009, a total of 1,402,816 bankruptcy petitions were filed in the federal courts, an increase of 35 percent from the 1,042,806 filed in 2008. The 2009 total marks the greatest number of bankruptcy filings since 2005, the year the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”) was passed and implemented.
Filings by debtors with predominantly non-business (consumer) debts—those incurred for personal rather than business needs—totaled 1,344,095, a 34 percent increase over 2008. Filings involving predominantly business debts totaled 58,721, a 52 percent increase over 2008. In fiscal year 2005, the last full year before BAPCPA took effect, a record 1,782,643 bankruptcy petitions were filed (1,748,421 consumer filings and 34,222 business filings). While overall monthly filings exceeded 100,000 in each month throughout fiscal year 2005, they plummeted to less than 15,000 in November 2005. However, overall monthly filings have been steadily increasing ever since. In fiscal year 2009, the number of consumer filings was still 23 percent below 2005 levels, but the number of business filings was 72 percent above 2005 levels.