First Quarter Bankruptcies Reach Second
Highest Three-Month Period in History
May 23, 2001, Alexandria, Va. — The number of bankruptcies filed during the first quarter of calendar year 2001 (Jan. 1 to March 31) rose 17.5 percent over the same period a year ago. Filings rose from 312,335 to 366,841, according to data released today by the Administrative Office of the U.S. Courts. The figure is the highest-ever for a first quarter and is surpassed in the number of quarterly filings only by the second quarter of 1998 (April 1 to June 30, 1998), when 373,460 new cases were filed.
“The economic slowdown beginning last fall, combined with historic high levels of consumer debt, mean that filings will reach a new peak this year,” said Samuel J. Gerdano, Executive Director of the American Bankruptcy Institute (ABI).
The total bankruptcy filings for the quarter ending March 31 slipped slightly from a 10-year high when they reached 1,423,123 in March 1998, but the total remains well above the one-million mark. The total number of bankruptcy petitions filed rose a slight 0.5 percent in the 12-month period ending March 31, from 1,301,205 to 1,307,857.
The first quarter 2001 statistics show a significant increase in consumer filings and a modest increase in business filings. The statistics also show that the workload per judgeship has increased substantially from 3,007 filings to 4,037.
“Bankruptcy judges, as well as U.S. Trustees, are simply overworked and the system overtaxed,” said Prof. Jack F. Williams, the Robert M. Zinman Resident Scholar at ABI. “The recent sharp rise in chapter 7 filings may also suggest that debtors and debtors’ attorneys may be engaging in opportunistic behavior; that is, employing the chapter 7 filing option now before that option is largely foreclosed by the new bankruptcy bill.”
Of the total number of bankruptcy filings for the 12-month period ending March 31, there were 904,397 chapter 7 filings, a 0.5 percent decrease from 908,802 chapter 7 bankruptcies filed in the same period in 2000. The next largest group of filings is chapter 13. These increased by 3 percent from 381,568 for the same period in 2000 to 393,033. Chapter 11 filings increased 0.7 percent from 10,071 to 10,139. Chapter 12 filings saw a significant decrease, falling 66.4 percent in the 3-month period from to 739 to 248. This drop is mainly due to the expiration of chapter 12 on July 1, 2000.
Of the total number of bankruptcy filings for the 3-month period ending March 31, chapter 7 filings increased by 21 percent from 215,454 to 260,692. Chapter 13 filings also saw an increase during the first quarter. They rose by 10 percent from 94,007 to 103,168. Chapter 11 filings showed a 10 percent increase from 2,699 to 2,961. And as in the 12-month filings, chapter 12 drastically decreased by 93 percent from 169 in the first quarter 2000 to 12 in the first quarter 2001.
The chapter* breakdown of non-business filings for the 12-month period ending March 31, 2001, is: 1,271,865 chapter 7s, 711 chapter 11s, and 387,565 chapter 13s.
The chapter breakdown of non-business filings for the 3-month period ending March 31, 2001, is: 254,895 chapter 7s, 191 chapter 11s, and 101,750 chapter 13s.
Districts with the Highest Percentage INCREASE in Total Filings
From January 1, 2001 to March 31, 2001 (compared to the same period in 2000)
District for the Northern Mariana Islands 50%
Eastern District of North Carolina 40%
Northern District of Mississippi 40%
Western District of Arkansas 38.2%
Eastern District of Arkansas 37.4%
Middle District of Tennessee 33.3
Districts with the Highest Percentage DECREASE in Total Filings
From January 1, 2001 to March 31, 2001 (compared to the same period in 2000)
District of Delaware 26%
District of the Virgin Islands 11.1%
Northern District of New York 9%
Northern District of California 8.8%
Southern District of California 2.4%
More information will be available on Friday at abiworld.org.
ABI is the largest multi-disciplinary, non-partisan 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 more than 7,800 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 ABI World at abiworld.org. For additional conference information, visit abiworld.org.
*Definitions from Bankruptcy Overview: Issues, Law and Policy, by the American Bankruptcy Institute
Chapter 7 of the Bankruptcy Code is available to both individual and business debtors. Its purpose is to achieve a fair distribution to creditors of the debtor’s available non-exempt property. Unsecured debts not reaffirmed are discharged, providing a fresh financial start.
Chapter 11 of the Bankruptcy Code is available for both business and consumer debtors. Its purpose is to rehabilitate a business as a going concern or reorganize an individual’s finances through a court-approved reorganization plan.
Chapter 12 of the Bankruptcy Code is designed to give special debt relief to a family farmer with regular income from farming. Chapter 12 expired on June 30, 2000, and was not reenacted until May 11, 2001.
Chapter 13 of the Bankruptcy Code is available for an individual with regular income whose debts do not exceed specific amounts; typically used to budget some of the debtor’s future earnings under a plan through which creditors are paid in whole or in part. |
