Learn About Chapter 11 Statistics

Learn About Chapter 11 Statistics

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Learn About Chapter 11 Statistics

The casual observer might only become aware of the more prominent Chapter 11 filings in America through television reports or newspaper stories, and consequently, think that they are exceedingly rare. Especially in the wake of the recession affecting the United States, though, accounts of corporations filing for Chapter 11 bankruptcy seem to be coming regularly.         

 

Chapter 11 bankruptcy, which is also known as corporate reorganization, is meant for the reallocation of assets to manage a debt repayment plan, and is therefore much more often requested by businesses than individuals. Of more than 14,000 filings under Chapter 11 in 2009 in the United States, over 90% were a result of voluntary applications by executive officers or involuntary calls for reorganization by creditors and others. As for regional differences, as with Chapter 7 filings, Chapter 11 bankruptcy is highest in the Ninth Circuit and lowest in the First.

         

As of late, trends in Chapter 11 filings are a point of worry to many. Only two (fiscal) years ago, the total number of Chapter 11 bankruptcy petitions was less than 6,000. Come 2009, this annual sum jumped to over 14,000. Basic math will tell you that the amount of requests for reorganization have more than doubled in this time, and realistically, is a short span for such a profound increase to occur. Overall, the insolvency of numerous companies as demonstrated by these spikes and those of Chapter 7 rates is of little solace to those who have lost their jobs to the need of organizations to balance their debt.

         

In terms of the most costly Chapter 11 bankruptcies of all time, certain industries tend to jump out at one upon review. Perhaps ironically, and symbolized by Lehman Brothers' collapse as the biggest Chapter 11 bankruptcy of all time, financial services corporations have dotted the bankruptcy landscape. Telecommunications (e.g. Worldcom, MCI), energy/utilities (e.g. Enron, Texaco), and automotive/transportation (e.g. General Motors, Delta Air Lines) have also contributed to make up the majority of cases where companies with billions of dollars in assets were for a time insolvent and/or shut down for good. 

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