April bankruptcies show year-over-year, double-digit drop: A 1st since ’06
U.S. Bankruptcy Court building in Old San Juan (Credit: © Mauricio Pascual)
The number of bankruptcy cases filed in April reflected a year-over-year double-digit drop, an occurrence unseen since 2006, when Puerto Rico’s drawn-out local recession began. A total of 913 cases were filed that month, representing an 11 percent reduction in comparison to April 2010, research firm Boletín de Puerto Rico said Tuesday.
When analyzed collectively, the number of cases filed at the local U.S. Bankruptcy Court was virtually flat, up only 1 percent versus the same four-month period in 2010. The last time the filing remained pretty much the same year-over-year was a decade ago, the data provided by the independent research firm shows.
Individuals seem to be pulling out of the economic funk, as the 2,402 Chapter 13 cases on record for the first four months reflect a 2 percent drop, when matched up against the same period last year. However, the opposite goes for the other three categories.
Chapter 7 cases, or total liquidation of assets, stood at 1,260 cases through April, up 4 percent year-over-year. Chapter 11 cases, or reorganizations, totalled 64 for the first four months of 2011, up 68 percent in comparison to the same period last year.
Unsurprisingly, the embattled farming sector continues seeking the court’s protection, which has received 13 cases so far this year, up a whopping 160 percent percent against the five cases on record from January to April 2010. Half of the cases the sector has filed this year involve dairy farms.
Skyrocketting debt
While the number of cases filed through April shows a slight improvement, the associated debt exceeded $805 million, up 74 percent from the $463.8 million on record through April 2010.
“Every type of debt increased, with secured debt ending up as the highest, with a 71.27 percent increase,” the report said, referring to this year’s $446.6 million total so far.
Unsecured debt racked up so far exceeds $349.7 million while prioritized debt surpassed the $8.6 million mark.
While individuals amassed more than $354.3 million of the total amount, businesses ended up owing more than $450.7 million during the first four months of this year.
“This increase in reported debt is related to filings by developers and builders. Thirty six percent of business debt and 27 percent of the total debt corresponds to this sector. About 37 percent of total debt corresponds to the fifteen largest commercial filings,” Boletín de Puerto Rico said.
Restaurants, followed by developers and builders head the list of the most commercial petitions filed during the first four months of calendar year 2011, with 21 and 17 filings, respectively. Some of the most notable filings include the local Johnny Rockets hamburger franchise, with more than $2.9 million in debt.
