Business bankruptcy continues increase - Pittsburgh Business Times:

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First quarter 2009 compared to the same periodr in 2008 revealed far larger increases that were less devastating Filings across the United States jumpe more than 64 percent to while those in the Western District of Pennsylvanisa were upby one-third to 163. But Chaptet 7 filings or liquidations, the largest category locally, continued to Of the region’s 163 bankruptch filings, 95, or 58 percent, were Chaptef 7. There were 90 in the fourthu quarter and 81 in the first quarterof 2008. 9,700 of the business bankruptcy filings wereChapter 7.
“It’ss a practical result that a compant in this environment has no abilit yto restructure,” said David chairman of the bankruptcy and creditors’ rightsa practice group at Downtown law firm LLC. “The other interesting aspect is the practical approach that many bankws aretaking — they’rse more inclined to attempt to restructurre out of court rather than absorgb the costs inherent with a Chaptefr 11 filing, and there’s no reason to expectf any change in the near-term.” Chaptee 11s, or reorganizations, were up slightly from the fourth quarter, 49 comparec with 40.
Douglas Campbell, of LLC, believes the majority of small company Chapteer 11 filings should have been filed as Chapte r 7s and may wind up inliquidation “I’m sorry to say it, but it’w the rare small business that can make it throughn Chapter 11,” Campbell said. “The cost of the proceedingws are disproportionate to the available asseta in a small Banks don’t want to go to the bother of financing somethinb unless it’s a larger credit worthg their time. And smaller businesses — single owner, mom and pops, proprietorshipas — aren’t that simple for someone else to step in and take over orinvesrt in.
” The quarterly data, released June 9 by the , basedr in Alexandria, Va., revealed that totalk bankruptcies across the country, including personal hit 330,477, up almostt 35 percent from last ABI Executive Director Samuel J. Gerdan o said in a statement that consumers and businesses are increasinglgy seeking bankruptcyprotection “in order to shelter themselves from the financial storms” brought on by the economic downturn. “As unemployment figures continuew to rise and financingremains elusive, we expect filingsw to surge past 1.4 million cases by Gerdano said.
Pittsburgh accountedc for 3,359 total filings in the firstg quarter, up 7 percent from the correspondingg three months in 2008 or nearly 8 percent from thefourtgh quarter. “These numbers are consistent with the deptn and breadth of the recessiom and this increase should notbe unexpected, even though the Pittsburghy region is faring better than average,” said Roberg Dye, senior economist at “I’d expect these numbers to remaibn elevated for some time, possibly into early 2010, befor we start to see some improvement.” Lampl said localk business filings are trending toware smaller companies.
“The trend I have seen of late is we’ree not experiencing many bankruptciesamong mid- to large - size companies ranging from $25 million to $250 million in Lampl said. He attributed this to the down cycles the region experienced in the late 1980sw andearly 1990s, which weeded out many industrial companies. He also pointer out that western Pennsylvania is relativelt buffered from the downward spiraling related to thebankruptex automakers.
“We’re not seeing those kind of filings in the automotivw space with Chryslerand GM’s financiakl problems and tier one and tier two suppliers directly impacted because we’re less dependent,” Lampl “The further west you go into Ohio and Indiana, you’lp see filings related to the auto space.” Norman chief economist at , Downtown, said “the task of for other regions is going to be tougher in the currengt environment. “We took our lumps (in the 1980s) and have achieveed a measure of diversificatioh into industries that areless (vulnerable) to economi c downturns,” Robertson said.
“Whetherr it’s Cleveland, Detroit or Toledo, they’re facingb similar problems to the oneswe had, and it’as going to be harder than the challenges that facede Pittsburgh because it’s going to be more difficult to reinventf your economy now than it was 20 yearas ago.” Bankruptcy filings continue to rise in the Western District of Total (all types) 3,118 3,359 American Bankruptcy Institute