Under 28 U.S.C. ยง 159(b), the Director of the Administrative Office (AO) of the US Courts must submit an annual report to the Congress on bankruptcy statistics. The data must include business and non-business filings under Chapters 7, 11, and 13 of bankruptcy laws. The following story on business bankruptcy statistics for 2008 is based on these statistics:
As per the business bankruptcy statistics 2008, 1.4 million people filed for bankruptcy in that year. 1.07 million bankruptcies were personal, while the rest were business and farm bankruptcies. Business bankruptcy filings for 2008 were 43,533.
2008 was the year the downturn began, and the economy continues to find its feet as we write this article (early-2012). For the year ended 2010, the number of business bankruptcy filings were up at 56,282, which clearly shows that the number of businesses filing for bankruptcy is on the rise. Business bankruptcy statistics 2008 reveal that most businesses filed for Chapter 7 business bankruptcy, which is liquidation. The Chapter 7 bankruptcy process involves drawing up a list of non-exempt assets and selling them to repay creditors in order of priority. Once the money is distributed, the business is liquidated.
The trend now is to file for bankruptcy under Chapter 11, which helps a business reorganize its financial affairs. Businesses who have a thriving product line but are weighed down by debt submit a reorganization plan to the bankruptcy court. This plan will outline how creditors can be satisfactorily repaid if the business is given more breathing time. If the creditors agree to the plan, the business is granted more time to repay its loans and it has to execute the reorganization plan as per its terms. After execution of the plan, the business becomes debt-free.
It is indeed heartening to note that while Chapter 7 cases were rising as per business bankruptcy statistics for 2008, most of the current filings are Chapter 11 filings. This means that a business filing for bankruptcy today does see some light at the end of the tunnel, which was not the case in 2008. However, it remains to be seen how the economy pans out.
The business bankruptcy statistics for 2008 reveal that when the depression first hit America in 2008 and blew many businesses away, most businesses chose to fold up under Chapter 7. The bankruptcies of today are mostly Chapter 11 bankruptcies. This holds out some hope for the economy because when a business reorganizes itself, it continues operating and therefore keeps the overall economy chugging.
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