Commercial Chapter 11s Jump in July, but Remain at Historic Lows

Commercial Chapter 11 filings jumped in July, as last month's 536 filings marked an 8% increase over June's figures. Other categories notched smaller increases, including total commercial bankruptcy filings, which leapt 3% from 3,468 in June to 3,581 in July, and total bankruptcy filings overall, which moved to 87,684 in July, up 5% from June's total of 83,603.

Despite the month-to-month increase, however, bankruptcies on a year-over-year basis continued their seemingly endless decline. Total filings in the U.S. for July were 10% lower this year than they were last year, and commercial filings in particular have continued to register huge year-over-year declines. Total commercial cases for July 2013 decreased by 23% from July 2012's total, and Chapter 11 filings fell by 24% last month when compared to the same period last year.

While the reasons for the jump from June to July is harder to pinpoint, the blame for the regular declines in year-over-year figures lies squarely on the shoulders of low interest rates, which continue to make it easier for companies to refinance their debt than to file bankruptcy, and easier for lenders to allow businesses to scrape by without creating too great of a burden on their balance sheet.

According to American Bankruptcy Institute (ABI) Executive Director Samuel Gerdano, should the decline in bankruptcies continue, as it's expected to, 2013 could have the lowest total new bankruptcies since before the financial crisis in 2008.

- Jacob Barron, CICP, NACM staff writer

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