Bankruptcy Filings Rise 10%, and Courts Feel the Pinch
Attorney Glenn Moses attributes the uptick to "...a more conservative approach by banks in their lending practices – causing liquidity issues for business which often results in a bankruptcy filing."
Federal court data show a double-digit uptick in bankruptcy filings. In a report issued July 31, personal and business bankruptcy filings rose 10 percent in the 12-month period ending June 30, compared with the previous year.
“We have seen an uptick in business restructurings and Chapter 11 filings this year,” said Glenn D. Moses, a partner at Venable, Miami. Moses focuses on complex commercial bankruptcy, financial restructuring, and insolvency matters.
“Several factors can be seen to have contributed to this, including 10 successive interest rate hikes by the Federal Reserve, making borrowing money more expensive; rising inflation; continued supply-chain disruption; and a more conservative approach by banks in their lending practices—causing liquidity issues for business, which often result in a bankruptcy filing,” Moses said.
On a broader scale, according to the newest statistics released by the Administrative Office of the U.S. Courts, annual bankruptcy filings totaled 418,724 in the year ending June 2023, compared with 380,634 cases in the previous year.
According to Southern District of Florida bankruptcy Judge Erik P. Kimball, such a rise is also keeping courts busy. “We have seen an increase in bankruptcy case filings in the Southern District,” Kimball said, pointing to the most up-to-date statistics complied by his division:
The website says its statistical data is based on information gathered from the court’s case management system. It also states that this information is considered unofficial, as the official statistics are maintained and published by the Administrative Office of the U.S. Courts.
With only half the year included in the calculations, the South Florida numbers indicate an annual pace likely to top last year’s filings. And on the national scale, business bankruptcy filings rose 23.3 percent, from 12,748 to 15,724, in the year ending June 30, 2023. Non-business bankruptcy filings rose 9.5 percent, to 403,000 compared with 367,886 in the previous year.
According to the federal government’s report, filings have increased only rarely over any 12-month period since they peaked in 2010. Despite some early Covid-related economic disruptions, bankruptcies have been falling since the pandemic began in early 2020.
Bankruptcy totals are reported four times annually by the U.S. government.
From: Daily Business Review