By Scott Miller
smiller@scbiznews.com
Published March 6, 2009


Business bankruptcies increased 54% last year, according to data released Thursday by the Administrative Office of the U.S. Courts.

Local bankruptcy statistics are not yet available for the end of year, but South Carolina appears to be part of the trend.

Last year, 7,988 cases, both business and consumer, were filed in the U.S. Bankruptcy Court District of South Carolina, an average of about 660 a month. This year, South Carolina is on pace to report many more. In January, 728 cases were filed with S.C. district court. In February, 824 were filed.

“Our bankruptcy guys are very busy,” said Bill Youngblood, managing partner of the McNair Law Firm, which has offices throughout the state. “I fully expect that our bankruptcy or insolvency groups will be very busy in 2009 and those cases will stretch into 2010.”

The firm mainly handles bankruptcies involving business debt, he said.

Based on the most current local statistics, Greenville County led the state in business filings in fiscal 2008, which ended Sept. 30. Of the 222 businesses that filed bankruptcy in South Carolina that fiscal year, 39 were in Greenville County.

The top counties were as follows:

Greenville[bm1]   39

Richland           25

Charleston        22

Lexington         17

Spartanburg      16

Aiken   12

Anderson         11

 
Looking to bankruptcies in 2009, automotive suppliers and real estate developers have been particularly hurt by the current economy, Youngblood said. 

George Cauthen, a bankruptcy attorney with Nelson Mullins, said car dealerships, hotel operators and others in the hospitality industry are likely to file in the upcoming year, too.

But, unlike in years past, those companies are not finding buyers for their businesses, he said.

“For the last few years, many Chapter 11s basically have been a method of selling a business free and clear of liens. They would pay creditors with the sale proceeds,” Cauthen said. “Since the fall of ’08, we’re seeing fewer buyers. Some companies are just filing Chapter 7. They’re not even trying to reorganize. They’re just giving up.”

Consumer filings are up, as well.

In total, bankruptcy filings increased 31% last year to 1.1 million nationally, from 850,912 the year before, according to the Administrative Office of the U.S. Courts.


The filings break down as follows:

Chapter 7  744,424           +43%

Chapter 11       10,160 +60%

Chapter 13       362,762           +12%

Chapter 12       345      -8%

 

Filings that involved business debts accounted for 43,546 of the total, a 54% increase from 28,322 in 2007.

The American Bankruptcy Institute, which tracks data from the National Bankruptcy Research Center, expects bankruptcy filing to increase more this year, to at least 1.4 million.