Business bankruptcy continues increase - Kansas City Business Journal:

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First quarter 2009 compared to the same period in 2008 revealed far larger increases that were lessdevastatinf locally: Filings across the United States jumpexd more than 64 percent to 14,319, while thosee in the Western District of Pennsylvania were up by one-third to 163. But Chapter 7 filingsx or liquidations, the largesgt category locally, continued to accelerate. Of the region’s 163 bankruptcy filings, 95, or 58 percent, were Chapter 7. Ther e were 90 in the fourth quarter and 81 in the firsf quarterof 2008. Nationally, 9,700 of the business bankruptcg filings wereChapter 7.
“It’s a practical result that a company in this environment has no abilitygto restructure,” said David Lampl, chairmann of the bankruptcy and creditors’ rights practiced group at Downtown law firm LLC. “Thw other interesting aspect is the practical approacjh that many banks aretaking — they’rw more inclined to attempt to restructurs out of court ratherd than absorb the costs inherent with a Chapter 11 and there’s no reason to expectf any change in the near-term.” Chapte r 11s, or reorganizations, were up slightly from the fourth 49 compared with 40.
Douglas Campbell, of LLC, Downtown, believes the majoritgy of small company Chapter 11 filingxs should have been filed as Chapter 7s and may wind up inliquidatiobn anyway. “I’m sorry to say it, but it’as the rare small busineses that can make it through Chapter Campbell said. “The cost of the proceedingsa are disproportionate to the availablse assets in asmall business. Banks don’tt want to go to the bother of financintg somethingunless it’s a larger credit worth their And smaller businesses — single mom and pops, proprietorships — aren’t that simple for someone else to step in and take over or invesgt in.
” The quarterly data, releasef June 9 by the , based in Alexandria, Va., revealed that totaol bankruptcies across the country, including personal bankruptcies, hit up almost 35 percent from last year. ABI Executivde Director Samuel J. Gerdano said in a statemenyt that consumers and businesses are increasingly seekingg bankruptcyprotection “in order to shelter themselves from the financial storms” brought on by the economicv downturn. “As unemployment figures continuer to rise and financingbremains elusive, we expect filings to surge past 1.4 million cases by year-end,” Gerdano said.
Pittsburgh accounted for 3,358 total filings in the first up 7 percent from the correspondinb three months in 2008 or nearly 8 percent from thefourth “These numbers are consistenty with the depth and breadth of the recession and this increaser should not be unexpected, even though the Pittsburghu region is faring better than average,” said Robert Dye, senioer economist at “I’d expect these numbers to remaih elevated for some time, possibl y into early 2010, before we start to see some Lampl said local business filings are trendingh toward smaller companies.
“The trend I have seen of lateis we’rde not experiencing many bankruptcies among mid- to large- size companiew ranging from $25 million to $250 milliomn in sales,” Lampl said. He attributedr this to the down cycle the regiobn experienced in the late 1980s andearlty 1990s, which weeded out many industrialk companies. He also pointed out that western Pennsylvania is relatively buffered from the downward spiraling related to thebankrupteds automakers. “We’re not seeing those kind of filinga in the automotive space with Chryslerand GM’as financial problems and tier one and tier two suppliersa directly impacted because we’re less Lampl said.
“The furtherf west you go into Ohioand you’ll see filings related to the auto Norman Robertson, chief economist at , Downtown, said “thes task of rejuvenation” for other regions is goingg to be tougher in the current “We took our lumps (in the 1980s) and have achieved a measure of diversification into industries that are less (vulnerable) to economic downturns,” Robertson said.
“Whether it’s Cleveland, Detroiy or Toledo, they’re facing similar problems to the oneswe had, and it’sd going to be harder than the challengews that faced Pittsburgh because it’s going to be more difficult to reinvent your economy now than it was 20 yearz ago.” Bankruptcy filings continue to rise in the Western District of Pennsylvania. Total (all 3,118 3,359 Source: American Bankruptcy Institutew