Bankruptcy filings by U.S. businesses rose 67 percent in September from a year earlier, as mounting foreclosures and tighter credit prompted more companies to seek protection from their creditors.
Business filings rose to 5,813, while filings by both companies and individuals climbed 42 percent to 96,049, the most since bankruptcy laws were changed in 2005, according to data compiled by Automated Access to Court Electronic Records, a service of Jupiter eSources LLC in Oklahoma City.
Bankruptcy petitions since the beginning of the year increased 32 percent from the same period in 2007 to 799,531.
"It's no surprise that the bankruptcy rates are increasing as the economy is cooling and businesses and investors are under increasing stress,'' said Robert Dye, a senior economist at PNC Financial Services Group in Pittsburgh. ``With credit conditions worsening, that will only exacerbate it.''
A three-year housing slump that triggered a financial meltdown last month, prompting the Bush administration to push through Congress a $700 billion financial-market rescue plan today, has also spawned increased business and personal bankruptcies. Job losses in September totaled 159,000, the most in five years.
California, Arizona and Nevada, where housing prices soared during the boom and have since led in price declines and foreclosures, had the fastest year-to-date increases in bankruptcies from the same period in 2007. California posted a 76 percent gain in bankruptcies, to 93,210, followed by Arizona, with a 69 percent gain, and Nevada, with a 67 percent gain.
Builders, Developers File
Homebuilders and property developers across the nation are closing their doors. Renaissance Custom Homes LLC, a homebuilder from Lake Oswego, Oregon, filed for Chapter 11 reorganization on Sept. 25 in Portland, listing assets of $128.5 million against $116 million in debt. Dixie Management & Investment LP, a commercial and residential real estate developer from Fayetteville, Arkansas, filed for protection on Sept. 29.
At the current rate, total filings will be 30 percent higher than 2007 and 80 percent above 2006.
Filings by consumers soared just before revisions to bankruptcy law took effect in October 2005 and made it more difficult for individuals to erase their debts.
In the two weeks before the new law, 630,000 Americans sought bankruptcy protection, bringing total filings in 2005 to a record 2.1 million. There were 590,500 filings in 2006 and 827,000 in 2007.
