Managing Editor
Bankruptcy filings in Jacksonville continued to increase in March, boosting first quarter filings 10 percent over last year’s first three months.
At that rate, filings this year could surpass the 2009 figures, which were almost triple those in 2006 after laws were changed to make it harder to file.
Through March, the U.S. Bankruptcy Court Middle District of Florida reported 2,799 filings in Jacksonville, 250 more than last year’s first quarter.
“Bankruptcies are generally lagging economic indicators. As we emerge from the ‘Great Recession,’ it should be expected that bankruptcies will be on the rise because it takes months, if not years, for people and businesses to realize insolvency and to run out of available credit and capital,” said McGuire Woods lawyer Sara F. Holladay-Tobias. She works closely with Norfolk associate Dan Blanks on bankruptcy cases and said both see the same outlook.
Gardner Davis, a partner in the Foley & Lardner law firm, wasn’t optimistic.
“Jacksonville remains in the midst of a terrible recession,” Davis said.
“Many businesses as well as individuals face extraordinary financial hardships. Although the economic news contains suggestions that the economy is improving, for most businesses and households, these remain the worst of times,” he said.
At the first quarter rate, Jacksonville filings could top last year’s 11,144 cases. That was the highest since bankruptcy laws changed in 2005.
The filings consist of Chapter 7 liquidation, Chapter 13 personal repayments and Chapter 11 corporate reorganization, along with two other lesser-used chapters for family farms and fishermen and for cases that involve international holdings.
Filings are up 21 percent throughout the district, which covers Jacksonville, Orlando and Tampa. So far, 16,149 cases were filed, up more than 20 percent from last year’s first quarter. That pace would boost filings over last year’s 61,690 filings.
Among the district filings, Chapter 7 liquidations shot up 24 percent to 12,018 cases, Chapter 11 reorganizations almost doubled to 250 and Chapter 13 personal reorganizations rose 10 percent to 3,872.
Bankruptcy and restructuring lawyers say that job losses, housing foreclosures and credit difficulties are at the root of the increase.
Davis said that every week brings news of more firms closing.
“The consequences of business failures ripple through the community as former employees can no longer pay their bills, vendors must write off uncollectable accounts receivable and banks must recognize loan losses,” Davis said.
Not only that, but Davis considers the increase in bankruptcy filings “just the tip of the iceberg as far as the economic problems facing our community.”
“Most failed businesses never actually file bankruptcy and therefore their collapse goes unreported,” Davis said.
While economists say the recession that began in 2007 has ended, unemployment remains high. In Duval County, the unemployment rate rose to 11.35 percent in February from 11.2 percent in January, according to state numbers seasonally adjusted by the Local Economic Indicators Project at the University of North Florida. Duval’s unemployment rate was an adjusted 8.2 percent in February 2009.
Davis expects more filings through the better part of the year.
“I anticipate bankruptcy filings will continue to rise for at least the next two quarters. What I see is not getting any better for a bunch of hurting folks,” he said.
First-quarter bankruptcy filings
Jacksonville Division U.S. Bankruptcy Court Middle District of Florida
Source: U.S. Bankruptcy Court
First-quarter filings
Middle District of Florida Jacksonville, Orlando, Tampa
Source: U.S. Bankruptcy Court
Chapter 7 - Liquidation
Chapter 11 - Corporate reorganization
Chapter 12 - Farmer, fisherman reorganization
Chapter 13 - Individual reorganization
Chapter 15 - Insolvency involving more than one country
356-2466