San Jose Bankruptcy Attorney comments on the rise in business bankruptcy filings in October.
San Jose Bankruptcy Attorney comments on the rise in business bankruptcy filings in October.
Despite the national economy’s growth in 3rd quarter GDP, the number of businesses filing for bankruptcy protection in October rose 7 percent to 7,771 from the 7,271 reported in September. The increase in bankruptcy filings follows two months of declines, and is a sign that the economy still has much work to do to return to the growth seen earlier in the decade.
The tight credit markets are receiving much of the blame for the continued business bankruptcy filings. Despite billions of dollars distributed to banks and other financial institutions, commercial credit markets remain very tight, and many businesses are struggling to keep the lines of credit they have, and the prospect of securing new lines of credit is not good.
The numbers are even worse when compared to October, 2008. Business bankruptcies, both Chapter 11 and Chapter 7, rose 24 percent over that time period. Business bankruptcies tend to be a lagging economic indicator, and analysts expect several more quarters of increases in bankruptcy filings. The real estate and retail sectors seem to be the hardest hit, and analysts expect another rise in retail bankruptcies if the holiday shopping season disappoints, as many expect.
Bankruptcy filings for the 10 months of 2009 are up 16 percent over last year. The total number of October bankruptcies, including both personal and commercial filings, increased 20% from the same month last year. The number of filings last month, 130,199, is the most total filings since March, and the second-highest figure recorded since the beginning of 2006.
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