January 14th, 2012


BANKRUPTCY RECAP: 2011 in a nutshell


Bankruptcy cases filed in federal courts for fiscal year 2011, the 12-month period ending September 30, 2011, totaled 1,467,221, down 8 percent over the FY 2010 bankruptcy filings of 1,596,355, according to statistics released today by the Administrative Office of the U.S. Courts. Filings dropped during the fourth quarter of the Judiciary’s fiscal year, with 15 percent fewer filings than in the same three-month period in 2010.

Additional statistics released today include business and non-business bankruptcy filings for the 12-month period ending September 30, 2011 (Table F-2, 12-month); a comparison of September 2010 and 2011 filings (Table F), 4th quarter filings (Table F-2, 3-month); and monthly filings for the 12-month period ending September 30, 2011 (Table F-2, Monthly).

Business Bankruptcy Filings Fall

For the 12-month period ending September 30, 2011, business bankruptcy filings—those cases in which the debtor is a corporation or partnership, or the debt is predominantly related to the operation of a business—totaled 49,895, down 14 percent from the 58,322 business filings reported in the 12-month period ending September 30, 2010.

Non-business bankruptcy filings totaled 1,417,326, down 8 percent from the 1,538,033 non-business bankruptcy filings in September 2010.

Filings Under All Chapters

In FY 2011, filings fell for all bankruptcy chapters:

  • Chapter 7 filings in FY 2011 totaled 1,036,950, down 10 percent from the 1,146,511 chapter 7 filings in FY 2010.
  • Chapter 13 filings fell 4 percent, from 434,839 in FY 2010 to 417,503 in FY 2011.
  • Chapter 11 filings fell to 11,979, down 16 percent from the 14,191 Chapter 11 filings reported in FY 2010.
  • Chapter 12 filings fell to 676, down 4 percent from the 707 Chapter 12 filings in FY 2010.

Fourth Quarter Filings

The 3-month period ending September 30, 2011, was the Judiciary’s final quarter of fiscal year 2011. Total bankruptcy filings in the fourth quarter totaled 348,635, down 15 percent from the 412,380 bankruptcy cases filed in the final quarter of FY 2010. For a breakdown of filings by all chapters for the quarter, see Table F-2, 3-month period.

Economic uncertainty would be one way to describe 2011. Limiting the script to financial and economic developments, however, would leave a big part of the story untold, as we chronicle the (not so certain) aftermath of the Great Recession. Impacting worldwide financial and economic affairs in 2011 was a seemingly endless series of groundbreaking, thought-provoking, and sometimes cataclysmic events, including:

  • One of the worst nuclear disasters in history (Fukushima Daiichi, Japan);
  • The Arab Spring and the removal of two autocrats (Hosni Mubarak and Colonel Muammar el-Qaddafi);
  • The death of Apple founder Steve Jobs, shortly after Apple surpassed Exxon Mobil to become the world’s most valuable company;
  • The deaths of the most wanted terrorist in human history (Osama bin Laden) and a North Korean dictator (Kim Jong-il);
  • The “Occupy Wall Street” movement;
  • Phone Hackgate
  • Breaching the 7 billion mark in global population;
  • The end of a nine-year war in Iraq; and
  • The beginning of the second decade of the (most recent) war in Afghanistan
  • Among the most memorable business and financial sound bites and keywords of 2011 were the following:

In the U.S., the hallmarks of 2011 could readily have belonged to 2009 or 2010: high unemployment; depressed home values; high home-foreclosure rates; a high poverty rate and a widening income disparity between rich and poor; a national deficit of historic proportions; and a (well deserved) crisis of confidence in a dysfunctional political leadership riven by vituperative partisan politics. Still, the U.S. fared better in 2011 than many other countries. The eye of the global financial storm moved to Europe in 2011–Greece, Italy, France, Portugal, Spain, and Ireland, in particular–where the maelstrom now threatens to dismantle the 27-nation European Union, or at least the 17-member eurozone, which now confronts the very real prospect of a Great Recession II if austerity measures fail to provide enduring financial triage. The U.S.–Mixed Messages President Obama released a fiscal year 2012 budget on February 14, 2011, projecting that 2011 would see the biggest one-year debt jump in history, or nearly $2 trillion, to reach $15.476 trillion by September 30, 2011, the end of the fiscal year. That would have equated to 102.6 percent of gross domestic product (“GDP”)–the first time since World War II that that figure has been reached. The budget projected that the U.S. government would run a deficit of $1.645 trillion in 2011. The U.S. Government Accountability Office issued its report on the 2011 fiscal year on December 23, 2011. It states that the U.S. officially closed its books on fiscal year 2011 with approximately $15.3 trillion in debt–still an all-time record–equating to 100.3 percent of GDP. The deficit, however, was $1.299 trillion, slightly more than the $1.293 billion deficit in 2010 and less than the $1.413 trillion deficit in 2009. By contrast, 2007’s deficit was just $160 billion. On August 5, 2011, Standard & Poor’s (“S&P”) removed the U.S. from its list of risk-free borrowers for the first time, cutting its rating of long-term federal debt to AA+, one notch below the top grade of AAA. It described the decision as a judgment about the nation’s leaders, writing that “the gulf between the political parties” had reduced its confidence in the government’s ability to manage its finances. The U.S. had maintained the highest credit rating since S&P first designated it AAA in 1941. The downgrade ignited one of the most harrowing stretches in Wall Street history, with wild swings in the financial markets captivating the nation and the world. Even so, the U.S. Treasury had no trouble attracting investors in subsequent auctions of government securities, perhaps reflecting the deep cynicism towards ratings agencies harbored by investors in the wake of the financial crisis. The downgrade came shortly on the heels of a last-minute agreement in Washington to raise the U.S. debt limit and ward off “Debtmaggedon,” a possible default by the U.S. government on its obligations. The deal reached by lawmakers provided for cuts of approximately $2.5 trillion from the deficit over a decade. $1.5 trillion of the cuts were to be determined by a deficit-reduction “supercommittee” comprising 12 lawmakers evenly split between Democrats and Republicans. However, on November 21, 2011, the (not so) supercommittee conceded that panel members failed to come up with a plan, setting up what is likely to be a yearlong political fight over the automatic cuts to a broad range of military and domestic programs that would go into effect starting in 2013 as a result of the committee’s inability to reach a deal. Ninety-two federally insured banks closed their doors in 2011, compared to 157 in 2010 and 140 in 2009.

  • Service Areas

    We are proud to serve clients with paralegal services in many local communities.

    • Beverly Hills
    • Burbank
    • Glendale
    • Los Angeles
    • Montebello
    • Pasadena
    • Studio City
    • Tarzana
  • Testimonials

    I have been sending all my clients to Panel of Paralegals, not one person has left with a complaint. With knowledge and experience combined, they get the job done efficiently and effectively. HIGHLY Recommended!

    Artin S.
    Glendale, CA