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Jax Daily Record Wednesday, Sep. 21, 201112:00 PM EST

Bankruptcy pace down 16% in first eight months

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Bankruptcy filings continue this year at a pace well below last year’s record rate, according to U.S. Bankruptcy Court Middle District of Florida statistics.

In the Middle District of Florida, the pace of filings from January to August was 16 percent below last year’s annual rate.

In the Jacksonville division, the pace is 13 percent slower than last year.

Nonetheless, the Middle District continues as one of the most active districts in the country for bankruptcy filings.

According to the U.S. Bankruptcy Courts website, from July 2010-June 2011, the Middle District of Florida was No. 3 in the number of filings.

For that 12-month period, the Central California District had 145,741 filings, the Northern Illinois District had 63,440 and the Middle District of Florida had 59,199.

“The Middle District, one of the largest in the nation, continues to have a higher volume of existing and filed cases than almost any other district,” said Michael Freed, Florida managing partner of the Brennan, Manna & Diamond firm and president of The Jacksonville Bar Association.

The Middle District encompasses 35 of the state’s 67 counties and covers the major metropolitan areas of Jacksonville, Orlando, Daytona, Tampa and Fort Myers.

The pace of bankruptcy filings this year will be affected by what happens with foreclosures, which slowed in the wake of questions about proper signatures on paperwork.

“Bankruptcies often follow from foreclosures. Foreclosures have been bottled up, to some extent, because of concerns raised by document irregularities with certain lenders and servicing agents,” said Freed.

“As those issues are getting resolved, we should expect both foreclosures and bankruptcies to increase,” he said.

In the Jacksonville division, the average monthly filings are 826 this year, down from 953.3 last year and 928.7 in 2009.

The recession’s toll has been clear in the trends.

For the full calendar year, Middle District bankruptcy filings rose from 15,304 in 2006 to 61,690 in 2009 and peaked at 66,618 last year. The pace so far in 2011 is about 55,910.

Bankruptcy attorneys attributed last year’s record rate to effects of the 2007-09 recession and the credit crisis.

Unemployment reached double-digits and consumers and businesses, especially those associated with real estate, faced particularly tough times.

The national recession ended two years ago. The Florida recession didn’t end until early 2010, economists have said.

Unemployment continues near or above double-digits.

The U.S. Labor Department reported that the national unemployment rate was 9.1 percent in August.

In Duval County, the rate rose to 11.02 percent in August from 10.87 percent in July, according to state numbers adjusted for seasonality by the University of North Florida Local Economic Indicator Project. While still above 10 percent, the rates are below the 12.61 percent in August 2010.

Within the Middle District, the Jacksonville Division covers 16 North Florida counties.

Filings in the Jacksonville division from January-August fell 16 percent from last year to this year, with 1,282 fewer filings.

At the eight-month rate, the division could end the year at a little more than 9,900 filings, compared with last year’s 11,439.

In the Middle District, filings are down by more than 8,300, or 18.3 percent, in the first eight months of the year compared to the first eight months of 2010.

If filings remain at the eight-month pace, the Middle District could end the year with about 55,910 bankruptcy petitions, down almost 11,000 from last year.

Among the Middle District filings:

• Chapter 7 liquidations were down 17.5 percent, while continuing to account for 75 percent of all filings. Businesses and individuals use Chapter 7.

• Chapter 13 wage-earner reorganizations are down 20 percent. The fillings account for 23.5 percent of all filings.

• Chapter 11 reorganizations are down 23.5 percent. While dominated by businesses, bankruptcy lawyers say high-wealth individuals are also seeking protection under the chapter.

The use of Chapter 11 by individuals has been increasing, and the majority of those filings are attributed to real estate investments, according to court information.

Freed represents NFL quarterback Mark Brunell, who is reorganizing under Chapter 11 in the Jacksonville Division. Brunell cited soured real estate investments in his filing.

Chief Bankruptcy Judge Paul Glenn in the Middle District has said earlier that since the recession began in late 2007, the court saw filings by real-estate related petitioners, such as construction companies, subcontractors, developers and related entities.

Then small businesses began filing, followed by more individuals who are invested in real estate and can no longer carry the debt because they can’t sell the properties or make enough rental income from them.

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January-August bankruptcy filings

Jacksonville Division, U.S. Bankruptcy Court, Middle District of Florida

YearEight-month filingsAnnual
20116,6049,906 (pace)
20107,88611,439
20097,46911,144
20085,2498,412
20073,8536,015
20062,6894,184

January-August Bankruptcy filings Middle District of Florida

Chapter200620072008200920102011
Chapter 75,6289,64217,79429,74634,06428,086
Chapter 1182149251428550421
Chapter 12241202014
Chapter 133,8356,4688,67610,34110,9658,751
Chapter 15001111
Totals9,54716,26326,72340,53645,60037,273

Chapter 7 – Liquidation

Chapter 11 – Corporate or high-wealth individual reorganization

Chapter 12 – Farmer, fisherman reorganization

Chapter 13 – Individual, wage-earner reorganization

Chapter 15 – Insolvency involving more than one country

Source: US. Bankruptcy Court

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