Larry Bodine Law Marketing Blog

Business Bankruptcies Down 15% to Pre-Recession Level

The good news is that the US economy is recovering. From a legal marketing standpoint, this means there are fewer files for lawyers practicing in bankruptcy. The Administrative Office of the U.S. Courts reports that in the first quarter of 2011, there were 12,376 petitions filed by businesses -- down 15% from the same period a year ago. This is less than the 4th quarter of 2008, the year when the recession got really ugly. 

Quarterly Business Filings by Year (1994-2011)

Year

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

Total

2008

8,713

9,743

11,504

12,901

43,546

2009

14,319

16,014

15,177

15,020

60,837

2010

14,607

14,452

13,957

13,030

56,282

2011

12,376

Typically, 96% of bankruptcy filings are filed by consumers. Many lawyers prefer to handle business bankruptcies because there is an estate with assets. A bankrupt company, the debtor, might use Chapter 11 to reorganize its business and try to become profitable again. Management continues to run the day-to-day business operations but all significant business decisions must be approved by a bankruptcy court.

Under Chapter 7, the company stops all operations and goes completely out of business. A trustee is appointed to liquidate (sell) the company's assets and the money is used to pay off the debt.

There are several bankruptcy hotspots where lawyers can focus their law firm marketing. States with the highest per capita filing rate (total filings) for the 12-month period ending March 31, 2011 were:

1.     Nevada
2.     Georgia
3.     Tennessee
4.     California
5.     Indiana
6.     Alabama
7.     Utah
8.     Michigan
9.     Arizona
10.  Colorado
 
Districts with the highest percentage increase in total filings for the 12-month period ending March 31, 2011 (compared to the identical period in 2010) were:
 
1.     Southern District of Florida: 26.5%
2.     Central District of California: 22.8%
3.     District of Utah: 19.7%
4.     District of Hawaii: 18.1%
5.     District of Arizona: 11.9%

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