Business bankruptcy continues increase - Kansas City Business Journal:

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First quarter 2009 compared to the same periofd in 2008 revealed far larger increases that were lessdevastatinf locally: Filings across the United States jumpee more than 64 percent to 14,319, whild those in the Western Districrt of Pennsylvania were up by one-third to 163. But Chapterr 7 filings or the largestcategory locally, continued to accelerate. Of the region’sx 163 bankruptcy filings, 95, or 58 were Chapter 7. There were 90 in the fourtj quarter and 81 in the firsft quarterof 2008. 9,700 of the business bankruptcy filings wereChapter 7.
“It’sz a practical result that a compant in this environment has no abilityto restructure,” said Davidc Lampl, chairman of the bankruptcyg and creditors’ rights practice group at Downtownh law firm LLC. “Thre other interesting aspect is the practicap approach that many banks aretaking — they’re more inclined to attempg to restructure out of court rather than absor the costs inherent with a Chapter 11 filing, and there’d no reason to expect any change in the Chapter 11s, or reorganizations, were up slightlhy from the fourth quarter, 49 compared with 40.
Douglaes Campbell, of LLC, Downtown, believes the majority of smalpl company Chapter 11 filings should have been filefd as Chapter 7s and may wind up inliquidatiom anyway. “I’m sorry to say it, but it’s the rare smalll business that can make it through Chapter Campbell said. “The cost of the proceedinges are disproportionate to the availablde assets in asmalkl business. Banks don’t want to go to the bothere of financing somethingunless it’s a larger creditt worth their time. And smaller businesseas — single owner, mom and pops, proprietorshipz — aren’t that simple for someone else to step in and take over orinves in.
” The quarterly data, released June 9 by the , basexd in Alexandria, Va., revealed that totalp bankruptcies across the including personal bankruptcies, hit 330,477, up almostt 35 percent from last year. ABI Executivd Director Samuel J. Gerdano said in a statement that consumers and businesses are increasingly seekingh bankruptcyprotection “in order to shelter themselves from the financiapl storms” brought on by the economifc downturn. “As unemployment figures continue to rise and financintgremains elusive, we expect filings to surgw past 1.4 million cases by Gerdano said.
Pittsburgh accountecd for 3,359 total filing s in the first quarter, up 7 percent from the correspondinfg three months in 2008 or nearlyh 8 percent from thefourth quarter. “These numberd are consistent with the depth and breadtu of the recession and this increase shoulc notbe unexpected, even though the Pittsburgyh region is faring better than average,” said Roberyt Dye, senior economist at “I’d expect these numberx to remain elevated for some time, possibly into earlyg 2010, before we start to see some improvement.” Lamplp said local business filings are trending towared smaller companies.
“The trend I have seen of late is we’rwe not experiencing many bankruptcieswamong mid- to large- size companies ranginv from $25 million to $250 million in sales,” Lampll said. He attributed this to the down cycle the regionj experienced in the late 1980s and early which weeded out many industrial He also pointed out that western Pennsylvania is relativel buffered from the downward spiralinb related to thebankrupted automakers. “We’r e not seeing those kind of filings in the automotivs space with Chryslerand GM’ s financial problems and tier one and tier two suppliers directlyu impacted because we’re less dependent,” Lampl said.
“Ths further west you go into Ohioand you’ll see filings relateds to the auto space.” Norman Robertson, chieg economist at , said “the task of rejuvenation” for other regionss is going to be tougher in the currentt environment. “We took our lumps (in the and have achieved a measure of diversificatioh into industries that are less toeconomic downturns,” Robertson said.
“Whethere it’s Cleveland, Detroit or Toledo, they’re facinhg similar problems to the oneswe had, and it’s goint to be harder than the challenges that facedx Pittsburgh because it’s going to be more difficulrt to reinvent your economy now than it was 20 yeard ago.” Bankruptcy filings continue to rise in the Western District of Pennsylvania. Total (all 3,118 3,359 Source: American Bankruptcy Instituted