Of all domestic bankruptcy options, bankruptcy statistics put forth by the United States Court system indicate that Chapter 9 municipality reorganization is by far the rarest. With less than 500 or 600 total cases processed since the passing of the Federal Municipal Bankruptcy Act in the 1930s, Chapter 9 bankruptcy receives even less petitions than Chapter 12 bankruptcy.
The most recent bankruptcy statistics available for all bankruptcy options are those from the first three quarters of 2009. In that time, only six petitions for Chapter 9 bankruptcy relief were processed. The year before, a mere four were actualized. In fact, in the past three decades, the highest amount in any one year has been a mere 18 cases. In short, evidence indicates trends in Chapter 9 filings have stayed true to traditional form.
Seeing as there are so few Chapter 9 reorganization plans that actually go into effect, it realistically doesn’t make a large degree of sense to break down bankruptcy statistics by region. Besides, as each municipality is its own entity and may differ significantly from its neighbors, analyzing trends in geographic districts is of dubious merit. Of course, this assumes that Chapter 9 municipality reorganization is even one of the bankruptcy options open to a community. Some states (26 of them, to be precise) expressly forbid their composite municipalities from trying to balance its debts this way.
Lately, more and more municipalities have considered Chapter 9 among their bankruptcy options, especially with the experience of Vallejo so fresh in people’s minds. For example, the City of Harrisburg, Pennsylvania, the State’s capital, has contemplated such a measure in light of hundreds of millions of dollars in debt to programs as seemingly banal as its trash incinerator service. It goes without saying that numerous communities across the United States are feeling the pinch from the recession still gripping the nation.
