3 posts from December 2021

Bankruptcy Filing Rate Is Lowest Since Bankruptcy Code's Enactment--The Question Is Why

posted by Bob Lawless

2021 (Nov) Projected FilingsThere will be around 400,000 total bankruptcy filings in 2021. That figure is historically low. The table to the right shows annual filing figures since 2010, which was the post-2005 peak. The 400,000 filings this year is a 75% reduction from 2010. 

The 400,000 filings in 2021 will be a rate of 1.21 bankruptcy filing per 1,000 persons (using the mid-year, July population estimate). That is the lowest annual rate since the enactment of the Bankruptcy Code. In 1980, the first full calendar year of filings under the new law, there were 1.22 filings per 1,000 persons. In absolute numbers, there were 122,000 more filings in 2021 than in 1980, but there also are over 100 million more people living in the U.S.

Filings Per 1000.1980 to 2021Every calendar year since 1980 has had a higher bankruptcy filing rate. Absent some surprisingly high number of filings in December, this year will put an end to that. Ed Flynn's numbers over at the American Bankruptcy Institute show that at least through December 12, the situation has not changed.

Why are bankruptcy filings so low in the midst of a pandemic that has caused so much economic upheaval? Anyone who claims to have an answer to that question is either lying or overconfident. I certainly don't have an answer, but I have some hypotheses suggested by the data, with emphasis on "hypotheses." Below the fold, I explain those hypotheses and conclude with some thoughts about how much lower the filing rate can get.

Continue reading "Bankruptcy Filing Rate Is Lowest Since Bankruptcy Code's Enactment--The Question Is Why " »

FDIC Power Struggle

posted by Adam Levitin

Remember when there were two dueling claimants for the title of CFPB Director? Well, we're now seeing a repeat of that conflict play out with the FDIC.

The FDIC is governed by a five member board, consisting of the FDIC Chair, a Vice-Chair, the CFPB Director, the Comptroller of the Currency, and at-large director. By statute, no more than three of the board members may be from the same political party. The Chair, Jelena McWilliams, is a Trump appointee. The vice-chair position is vacant. The other three directors are all Democratic appointees. That means that three of the four directors on the board are Democrats, but the chair is a Republican. So who is calling the shots at the FDIC?

The issue just came up because the three Democratic appointees voted to direct the FDIC's Executive Secretary to transmit a Request for Information for publication in the Federal Register (which provides the notice required under administrative law of a proposed action). That vote and instruction only appear in a statement released on the CFPB's website. The FDIC's website (presumably controlled by Chair McWilliams) states that no such action was approved by the FDIC.

What's going on here?

Continue reading "FDIC Power Struggle" »

Contract Ambiguity: Paying Versus Still Owing a Debt

posted by Jason Kilborn

I've been meaning for some time to tell this brain-candy story involving an amazing ambiguity in a Chinese debt-related contract. Now that my career-first research semester is drawing to a close and the holiday break is upon us, I thought now's the time to tell it.

To set up the story, the equivalent of the legal-cultural Latin phrase pacta sunt servanda (debts are to be paid) in Chinese is 欠债还钱 (qiàn zhài huán qián) [the phrase continues, but this is the key bit]. It means "If you owe a debt, return the money." Here's where the craziness comes in: Most Chinese characters have one and only one single-syllable pronunciation. That syllable might have many diverse meanings, but how that character sounds is consistent.

Not so with the key character in the above phrase. The character 还 can convey the sound huán, in which case it means "return," or more frequently, it carries the sound hái, which means "still" (that is, carrying on, as in "I still love him despite his sometimes beastly behavior").

Continue reading "Contract Ambiguity: Paying Versus Still Owing a Debt" »

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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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