Chapter 11 of the U.S. Bankruptcy Code is a legal process for the rehabilitation, restructuring or orderly liquidation of troubled business enterprises. With the economic decline following the Great Recession of 2008-10 and the resulting tightening of commercial credit in the United States, business Chapter 11 filings should be at an all-time high.
Instead, the filing statistics maintained by the Administrative Office of the U.S. Courts illustrate a different trend. In 2008, 9,272 business Chapter 11 bankruptcy cases were filed; in 2009, business Chapter 11 filings increased to 13,683. See www.uscourts.gov/Statistics/BankruptcyStatistics.aspx. However, in 2010, business Chapter 11 filings dropped to 11,774. For the first quarter of 2011, filings fell to 2,605 from 3,293 for the same quarter last year. These filings remain down everywhere, including the popular Delaware and Southern District of New York venues. An analysis of the business cycle and Chapter 11 filings yields reasons why businesses are not seeking Chapter 11 relief now and an informed basis to consider what to expect in the future.
