Bankruptcies on the Rise This Year
The American Bankruptcy Institute has issued a report that says commercial bankruptcies have risen in the first half of this year compared to the same period a year ago. The spike was particularly significant in the month of June this year.
According to a news release on the Institute’s website, the total number of Chapter 11 commercial bankruptcies during the month of June was 581. Compared to June 2016, when 502 Chapter 11 bankruptcies were filed, this accounts for a 16% jump in bankruptcies.
Overall, the total number of bankruptcies also saw a slight increase in June. Total commercial bankruptcy filings in June 2017 were 3,385, which was higher than the 3,338 filings in June 2016. Likewise, the total number of noncommercial bankruptcies also jumped from 63,000 filings in June 2016 to 63,372 in June 2017.
When expanding the scope of the report to the first six months of this year, the conclusion is no different.
Total bankruptcy filings between January and June increased 0.21%, from 398,627 filings in 2016 to 399,454 in 2017. Total commercial filings witnessed a spike of one percent from 19,567 filings during the first six months of 2016 to 19,765 filings during the same period this year. Likewise, consumer bankruptcies during this period also registered a 0.17% increase compared to the same period in 2016.
The report also lists the states that reported the highest per capita bankruptcy filing rates, which show the number of filings against a population of 1,000 Americans. The top five states which reported the highest per capita filings during the first six months of 2017, from highest to lowest, were Alabama, Tennessee, Georgia, Mississippi, and Utah.
The Executive Director of the American Bankruptcy Institute, Samuel Gerdano, predicts that the total consumer and commercial bankruptcies will altogether increase by the end of this year, compared to the same period last year.
Gerdano also points out that most of the commercial bankruptcies have occurred in the retail sector, which is facing an unprecedented number of store closures and layoffs this year.
“The economic challenges weighing on the balance sheets of struggling consumers and companies, especially retail businesses, have them seeking the financial shelter of bankruptcy,” he said.
He further added, “Total bankruptcies for 2017 will likely approach 800,000, a slight increase over last year.”
“June Commercial Chapter 11 Filings Increase 16 Percent over Previous Year,” American Bankruptcy Institute, July 6, 2017.