Bankruptcy filings were up 5 percent year-over-year in December 2015, when the number of Chapter 11 cases on record soared by 385 percent when compared to the same month last year, according to preliminary figures released Monday by research firm Boletín de Puerto Rico.
A total of 881 cases were filed during the month, representing 42 more cases when compared to December 2014.
“Banks have tightened credit requirements. The fact that in spite of credit tightening and a lower population, bankruptcies went up in December, is an indication of an economy in contraction,” said Economist Vicente Feliciano, president of Advantage Business Consulting.
However, activity was down slightly during the 12 months ended in December, when a total of 10,469 cases were submitted before the U.S. Bankruptcy Court. That represented a cumulative 2 percent year-over-year drop. A total of 247 fewer cases were filed in 2015, in comparison to the prior year, the research firm revealed.
When broken down by categories, the results show that individuals and corporations sought the court’s protection in droves to reorganize their finances under Chapter 11 throughout the year.
Chapter 7 filings, or those filed by individuals or corporations seeking total liquidation of assets, were up 33.5 percent in December, with 378 cases filed. In 2015, a total of 4,477 filings were submitted in court, representing a 9.7 percent cumulative year-over-year increase, with 398 more cases on file.
Chapter 13 cases, or those that allow individuals to undergo a financial reorganization supervised by a federal bankruptcy court, were down 14.4 percent in December, when 469 cases were filed. A total of 5,786 people sought the court’s protection through the 12-month period, representing a 9.9 percent year-over-year drop. A total of 637 fewer cases were filed in 2015.
Meanwhile, Chapter 11 filings — a type of legal protection available to businesses and individuals looking to reorganize their finances and start over — totaled 34 for the month, up 385.7 percent when compared to the same month in 2014. For the year, 190 cases were filed, remaining relatively flat when compared to 2014.
Finally, there were no Chapter 12 filings, or those reserved exclusively for farmers and agricultural operations, last month, representing a 100 percent drop when compared to December 2014. Cumulatively, those types of cases reflected a 30 percent drop over the 12-month period, with a total of 16 cases filed in 2015.