Commercial Chapter 11 Filings Increase 29 Percent in June from Last Year, Total Filings Decrease Slightly
Alexandria, Va. — The 447 commercial chapter 11 filings in June represented a 29 percent increase from the 347 filings in June 2021, according to data provided by Epiq Bankruptcy, the leading provider of U.S. bankruptcy filing data. Overall commercial filings decreased 7 percent in June 2022, as the 1,864 filings were down from the 1,999 commercial filings registered in June 2021. Small business filings, captured as subchapter V elections within chapter 11, experienced an 8 percent decrease from 106 in June 2021 to 98 in June 2022. Total bankruptcy filings were 32,175 in June 2022, a 6 percent decline from the June 2021 total of 34,291. Noncommercial bankruptcy filings totaled 30,311 in June 2022, also registering a 6 percent decrease from the June 2021 noncommercial total of 32,292.
Total bankruptcy filings were 185,303 during the first six months of 2022, a 15 percent decrease from the 217,047 total filings during the same period a year ago. Total consumer filings also registered a 15 percent decrease, as the 175,112 filings during the first half of 2022 were down from the 204,679 filings during the first six months of 2021. The 10,191 total commercial filings for the first half of 2022 represented a 17 percent decline from the commercial filing total of 12,278 for the first half of 2021. The 1,765 total commercial chapter 11 filings during the first six months of the year (Jan. 1-June 30) were an 18 percent decrease from the 2,155 total filings during the same period in 2021, according to data provided by Epiq Bankruptcy Analytics.
“The year-over-year filing counts continue to show declines, but month-over-month we see growth in chapter 13 filings that when coupled with the growth in corporate chapter 11s, tell a different story,” says Chris Kruse, senior vice president at Epiq. “Turbulence in the market including inflation concerns, labor shortages in key industries, and a downward shift in housing prices all point toward increases in the months ahead.”
“Tightening credit markets amid increasing interest rates, elevated prices due to inflation and global supply concerns are presenting financially distressed families and businesses with more economic dilemmas,” said ABI Executive Director Amy Quackenboss. “Bankruptcy provides a shield to the mounting economic challenges being experienced by financially struggling consumers and companies.”
Total filings in the first half of 2022 point to a pace for the full year that could be the lowest since the 348,521 bankruptcies recorded by the Administrative Office of the U.S. Courts in calendar year 1984. Will total, business and consumer filings remain on this pace for the second half?
In partnership with Epiq, an abiLIVE webinar on July 12 will feature experts looking at filing trends through June 30 and providing their thoughts on what could happen with bankruptcies moving forward. Speakers on the program include ABI President Hon. Kevin Carey (ret.) of Hogan Lovells (Philadelphia), Deirdre O’Connor of Epiq (New York) and ABI's Ed Flynn (Alexandria, Va.). Christopher Kruse of Epiq (San Francisco) will serve as moderator for the program. Click here for your complimentary registration.
ABI has partnered with Epiq Bankruptcy to provide the most current bankruptcy filing data for analysts, researchers, and members of the news media. Epiq Bankruptcy is the leading provider of data, technology, and services for companies operating in the business of bankruptcy. Its new Bankruptcy Analytics subscription service provides on-demand access to the industry’s most dynamic bankruptcy data, updated daily. Learn more at https://bankruptcy.epiqglobal.com/analytics.
For further information about the statistics or additional requests, please contact ABI Public Affairs Officer John Hartgen at 703-894-5935 or [email protected].
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Epiq Bankruptcy is a division of Epiq, a global technology-enabled services leader to the legal services industry and corporations that takes on large-scale, increasingly complex tasks for corporate counsel, law firms, and business professionals with efficiency, clarity, and confidence. Clients rely on Epiq to streamline the administration of business operations, class action and mass tort, court reporting, eDiscovery, regulatory, compliance, restructuring, and bankruptcy matters. Epiq subject-matter experts and technologies create efficiency through expertise and deliver confidence to high-performing clients around the world. Learn more at https://www.epiqglobal.com.
ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes nearly 10,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abi.org. For additional conference information, visit http://www.abi.org/calendar-of-events.
President Biden Signs Bill into Law Providing Greater Access to Financial Fresh Start for Small Businesses and Consumers
President Biden Signs Bill into Law Providing Greater Access to Financial Fresh Start for Small Businesses and Consumers
Alexandria, Va. — The American Bankruptcy Institute (ABI) applauds President Joe Biden for signing into law yesterday the amended S.3823, the “Bankruptcy Threshold Adjustment and Technical Corrections Act.” The bill was introduced by Sen. Charles Grassley (R-Iowa) to raise the debt limit back to $7.5 million for small businesses electing to file for bankruptcy under subchapter V of chapter 11. Consistent with the recommendations of ABI’s Commission on Consumer Bankruptcy, the measure also raises the debt limit for individual chapter 13 filings to $2.75 million and removes the distinction between secured and unsecured debt for that calculation. The bill passed the Senate on April 7 and the House of Representatives on June 7. All provisions of the law will sunset two years from enactment, on June 21, 2024.
Due to priorities and procedural issues, the Senate was not able to address S.3823 prior to the March 27 sunset of the $7.5 million eligibility limit for small businesses electing to file for bankruptcy under subchapter V of chapter 11. The debt-eligibility limit returned to the original $2,725,625 threshold on March 28 that had been established under the “Small Business Reorganization Act of 2019” (SBRA). In addition to providing a two-year extension of the subchapter V debt limit back to $7.5 million, the law also covers any chapter 11 case eligible under the reinstated subchapter V debt limit that was pending or filed after the March 27 sunset.
“ABI commends the President and Congress for providing greater access to struggling small businesses and families looking to achieve a financial fresh start,” said ABI Executive Director Amy Quackenboss. “This law re-establishes the debt limit for subchapter V at $7.5 million and increases the eligibility of individuals to access relief under chapter 13, providing a cost-effective and efficient path for more consumers and businesses to reorganize their finances.”
As a direct result of the work of ABI’s Commission to Study the Reform of Chapter 11, the Small Business Reorganization Act of 2019 (SBRA) became effective on February 19, 2020, to provide Main Street business debtors with a more streamlined path for restructuring their debts. Since then, more than 3,000 debtors have elected to file under subchapter V of chapter 11. In response to the economic distress caused by the COVID-19 pandemic, the “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act; P.L. 116-136) was enacted on March 27, 2020, which increased the debt-eligibility limit from $2,725,625 to $7,500,000 for small businesses looking to file under the SBRA’s subchapter V. Congress extended the limit last year with the enactment of the “COVID-19 Bankruptcy Relief Extension Act of 2021,” but the threshold returned to $2,725,625 on March 27.
Sen. Grassley (R-Iowa) originally introduced the bipartisan S.3823 on March 14, aiming to make the subchapter V debt limit permanent at $7.5 million and index it to inflation, increase the chapter 13 debt limit to $2.75 million and remove the distinction between secured and unsecured debt in that calculation, make Small Business Reorganization Act technical amendments, and make Bankruptcy Administration Improvement Act technical amendments. Senate Judiciary Chair Richard Durbin (D-Ill.) and Sens. Sheldon Whitehouse (D-R.I.) and John Cornyn (R-Texas) are both co-sponsors of the legislation.
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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes nearly 10,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org.
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Corporate Debtors in Subchapter V Can’t Discharge Nondischargeable Debts, Circuit Says
ABI Applauds House Passage of the "Bankruptcy Threshold Adjustment and Technical Corrections Act"
Alexandria, Va. — The American Bankruptcy Institute (ABI) applauds the House of Representatives passage (392-21) yesterday of the amended S.3823, the “Bankruptcy Threshold Adjustment and Technical Corrections Act.” The Senate on April 7 had passed the legislation introduced by Sen. Charles Grassley (R-Iowa) to raise the debt limit back to $7.5 million for small businesses electing to file for bankruptcy under subchapter V of chapter 11. Consistent with the recommendations of ABI’s Commission on Consumer Bankruptcy, the substitute also raises the debt limit for individual chapter 13 filings to $2.75 million and removes the distinction between secured and unsecured debt for that calculation. All provisions of the legislation will sunset two years after enactment. The legislation will now be sent to President Biden to be signed into law.
Due to priorities and procedural issues, the Senate was not able to address S.3823 prior to the March 27 sunset of the $7.5 million eligibility limit for small businesses electing to file for bankruptcy under subchapter V of chapter 11. The debt-eligibility limit returned to the original $2,725,625 threshold on March 28 that had been established under the “Small Business Reorganization Act of 2019” (SBRA). In addition to providing a two-year extension of the subchapter V debt limit back to $7.5 million, the bill also covers any subchapter V cases that were pending at the time of the March 27 sunset.
“Amid growing economic challenges, ABI commends Congress on their determined action and efforts to provide greater access for struggling small businesses and families to achieve a financial fresh start,” said ABI Executive Director Amy Quackenboss. “Senator Grassley’s legislation re-establishing the debt limit for subchapter V at $7.5 million and increasing the eligibility of individuals to access relief under chapter 13 provides a cost-effective and efficient path for more consumers and businesses to reorganize their finances.”
As a direct result of the work of ABI’s Commission to Study the Reform of Chapter 11, the Small Business Reorganization Act of 2019 (SBRA) became effective on February 19, 2020, to provide Main Street business debtors with a more streamlined path for restructuring their debts. Since then, more than 3,000 debtors have elected to file under subchapter V of chapter 11. In response to the economic distress caused by the COVID-19 pandemic, the “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act; P.L. 116-136) was enacted on March 27, 2020, which increased the debt-eligibility limit from $2,725,625 to $7,500,000 for small businesses looking to file under the SBRA’s subchapter V. Congress extended the limit last year with the enactment of the “COVID-19 Bankruptcy Relief Extension Act of 2021,” but the threshold returned to $2,725,625 on March 27.
Sen. Grassley (R-Iowa) originally introduced the bipartisan S.3823 on March 14, aiming to make the subchapter V debt limit permanent at $7.5 million and index it to inflation, increase the chapter 13 debt limit to $2.75 million and remove the distinction between secured and unsecured debt in that calculation, make Small Business Reorganization Act technical amendments, and make Bankruptcy Administration Improvement Act technical amendments. Senate Judiciary Chair Richard Durbin (D-Ill.) and Sens. Sheldon Whitehouse (D-R.I.) and John Cornyn (R-Texas) are both co-sponsors of the legislation.
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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes nearly 10,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org.