Island bankruptcies up 3% in March, 6% in 1Q ’11
Puerto Rico’s bankruptcy levels continued their seemingly unstoppable upward trend in March, when the total number of cases filed, 1,103, were 3 percent higher than the number on record for the same month in 2010.
While all types of bankruptcies reported increases, the highest number of cases was filed under the Chapter 11, or reorganization, category. So far this year, 52 such petitions have been filed, representing a 58 percent year-over-year increase. Restaurants and construction contractors still lead the way for commercial bankruptcy filings, as per the results included in an analysis by local firm Boletín de Puerto Rico, which tracks the island’s bankruptcy trends.
In recent weeks, two familiar food service companies, Myrna’s Sweet and Johnny Rockets, sought Chapter 11 protection for their businesses.
There were 966 Chapter 7, or total liquidation cases, on file through March, representing a 12 percent increase over the first quarter of 2010. Chapter 12 cases, which only apply to farmers and agricultural businesses, saw a 450 percent year-over-year quarterly increase, with 11 cases filed.
However, Chapter 13 cases, for which individuals are eligible, remained steady, with 1,797 cases on record. That final category showed a slight 1 percent increase, Boletín de Puerto Rico’s statistics show.
The debt associated with the financially troubled businesses and individuals totaled $632.9 million during the quarter, up 81.6 percent when compared to the same period in 2010.
With the exception of prioritized debt, which showed a 4.3 percent drop, all other types of debt soared. Uninsured debt reached $264.2 million, up a whopping 87.9 percent for the quarter in comparison to the same period last year.
Boletín de Puerto Rico attributed the increase in reported debt to the filings by developers and builders, which usually entail millions in losses.