Business Bankruptcies Revisited

Back in June we published a story about the rising number of commercial bankruptcies. One of the big questions raised was how long the rate of bankruptcies will remain elevated. Some economists think bankruptcies will remain high for a year or more even after economic growth returns. (The third quarter GDP growth rate, to be released this Thursday, is widely expected to show positive growth.)

The latest commercial bankruptcy figures (courtesy of AACER) are below. The chart shows the average number of US commercial bankruptcies per filing day in each month (because some months have more business days than others, strict month-to-month numbers can be misleading).

At 344 average daily filings in September, the rate is down slightly from its peak in May, but still 24% above Sept. 08. Anecdotally, some bankruptcy professionals told me that many companies often resist filing until the beginning of the next year, in the hopes that a strong fourth quarter would help them avoid insolvency. So watch whether the rate of filings continues to decline into next year or ticks up again in 2010. One other note on this chart: Because many people filed in late 2005 before changes to the bankruptcy code took effect, the early months shown here reflect an unusually low number of filings.

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