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Bankruptcy Filings Drop in April

posted by Bob Lawless

The daily bankruptcy filing rate in April was 6,631, which was a 4.2% decline from March. The April filing rate was 13.2% higher on a year-over-year basis, but that is the lowest year-over-year increase since the trough after the 2005 changes to the bankruptcy law. As always, a thank you goes to Automated Access to Court Electronic Records (AACER) for supplying the data.

AprilFilingRates Before we get carried away with what looks like really good news, it is important to keep a few points in perspective. First, April has tended to see declines in the bankruptcy filing rate (see the table to the right). It's all part of the annual cycle of bankruptcy filings. Because February and (especially) March tend to have inflated filing rates as people use their tax refunds to pay for bankruptcy court costs and attorneys fees, April tends to see a decline as the filing rate moves back toward its mean. Second, the monthly bankruptcy filing rates do what a lot of data series do--that is, they move up and down. It's probably not profitable to draw conclusions from one month's worth of bankruptcy data. Indeed, it has only been a few years since information technology made reporting of monthly bankruptcy filing figures easy to do. Before then, we generally only looked at quarterly data. Third, as I'll explore later, there is a great deal of regional variation. Some parts of the country, especially in the west, are still seeing increasing filing rates.

Looking into the crystal ball, I'm still holding onto my prediction of between 1.65 and 1.70 million bankruptcy filings in calendar year 2010, which would represent a per capita filing rate close to the same as it was before the 2005 changes to the bankruptcy law. Specifically, 2010 calendar year bankruptcy filings will be:

  • 1,596,000 filings if bankruptcy filings continue for the rest of the year at the same daily rate (6,334 per day) as they have averaged for the first four months of 2010 (This estimate is almost certainly too low for an annual projection given the low January 2010 figure.)
  • 1,646,000 filings if bankruptcy filings continue for the same daily rate (6,631 per day) as they have averaged for March 2010
  • 1,677,000 filings if bankruptcy filings for the remaining eight months of 2010 constitute the same proportion of total filings as the last eight months of 2009 constituted for total filings that year (about 68.7%)

Comments

ATL needs to do a story about how many lawyers sustained through 20 hour per days and 300+ hour per months, how many partnerships crumbled due to the absence and stress related to lawyers trying to help save a company, how getting a car service to take you home at 4 a.m. is not a luxury but a must because the lawyer is so exhausted that she might not make it home if they chose to drive themselves, use a taxi or some form of public transportation.

Pardon my ignorance -- what is "ATL"? I'm sure there's a larger point you're trying to make here, but I'm missing it.

Arnie, I assumed "ATL" was a reference to "Above the Law," which is a law blog. The comment seems responsive to the discussion of the NYT article on chapter 11 attorneys' fees and might have been misposted.

WOW. April was soooo busy for us! In April we filed 26 13s and 6 7s (just our office)not locally. Kind of reminds me of the good ole days back in 95-98 when we were filing 30-35 cases per month. Again a higher than "normal" (whatever that means) small biz filing rate for us. We had a number of "Pushing the limit" biz 13s. Liquidated a Restaurant or two (one I really liked to eat at..)and saved one or two with a liquor store and boat biz thrown in for good measure. Can't complain about the monthly 13 Trustee check though. Probably due to our confirmed biz 13s.

It has been very busy for us totally reflecting these numbers. In fact we noticed queries for our website containing the keyword "bankruptcy" has risen significantly.

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  • As a public service, the University of Illinois College of Law operates Bankr-L, an e-mail list on which bankruptcy professionals can exchange information. Bankr-L is administered by one of the Credit Slips bloggers, Professor Robert M. Lawless of the University of Illinois. Although Bankr-L is a free service, membership is limited only to persons with a professional connection to the bankruptcy field (e.g., lawyer, accountant, academic, judge). To request a subscription on Bankr-L, click here to visit the page for the list and then click on the link for "Subscribe." After completing the information there, please also send an e-mail to Professor Lawless (rlawless@illinois.edu) with a short description of your professional connection to bankruptcy. A link to a URL with a professional bio or other identifying information would be great.

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