Business bankruptcy filings increased by 21 percent in October for United States businesses when compared to the same month a year ago. There were a total of 3,023 business bankruptcy filings in the U.S. in October of 2016, while the number of business bankruptcy filings for 2015 was 2,491. October of 2016 also marked 12 consecutive months in a row that saw a year-over-year increase in business bankruptcy filings.
A representative for the American Bankruptcy Institute noted that American businesses are continuing to utilize the protections of business bankruptcy as an option when struggling during a difficult financial period. Tennessee ranked as the state with the highest per capita filing rate. The business bankruptcy process provides different bankruptcy options to help struggling businesses. Bankruptcy options are available to businesses and consumers alike based on their needs for the process.
Depending on the future of the business, Chapter 7 liquidation bankruptcy or Chapter 11 reorganization bankruptcy may be available to struggling businesses to help them with their goals during a challenging time. When a decision has been made to close a business, Chapter 7 bankruptcy allows a struggling business to liquidate assets to repay creditors. If the business wishes to continue to operate and return to profitability, Chapter 11 bankruptcy is available as a resource to allow the business to restructure and reorganize debt to repay creditors.
The desired outcome of the bankruptcy process is usually debt relief and a reduction in financial stress, which either business bankruptcy option can provide. It is important that the bankruptcy option selected is aligned with the circumstances and goals of the business. It is essential to be well-educated concerning the bankruptcy options that are available and the process to help a struggling business.
Source: ACA International, "Year-Over-Year Commercial Bankruptcy Filings Continue to Increase," Nov. 3, 2016