Bankruptcy filings are accelerating in the New York metropolitan area at a faster pace than in the rest of the nation, according to figures released on Monday by the federal bankruptcy courts.
In the federal courts that serve the region, filings for bankruptcy protection — by individuals and businesses — were pouring in at the rate of about 175 per day in the three-month period that ended Sept. 30, the data showed. The filings in the city, New Jersey and Connecticut increased by more than 36 percent in the quarter, faster than the nationwide increase of 34 percent.
The statistics show that the rising tide of American bankruptcies that had already reached the surrounding areas of New Jersey and Connecticut has now rolled into the city. As unemployment rises, more consumers are falling behind on their debts and creditors have been increasing pressure on them to repay, bankruptcy lawyers said.
The two federal courts in the city — one in Manhattan and one in Brooklyn — recorded about 36 percent more filings in the third quarter of 2008 than in the same period last year. In the second quarter, filings in those courts rose about 30 percent, slower than the nationwide pace.
As usual, the bulk of the filings were made by individuals under Chapter 7 of the federal bankruptcy code, known as liquidations. For example, in the Eastern District Court in Brooklyn, nearly 75 percent of the 4,323 bankruptcy filings were personal Chapter 7 liquidations, while just 126, or 3 percent, of the filings were by businesses.
In Southern District Court in Manhattan, business filings made up about 8 percent of the 2,641 filings in the third quarter. But filings by businesses looking to reorganize their debts were rising at a fast rate, up about 45 percent in the quarter, compared with the same quarter of 2007. Among the biggest filings in the quarter were those of Lehman Brothers, the failed investment bank, and Steve & Barry’s, a chain of discount clothing stores.
Bankruptcies among businesses are likely to continue piling up for months, said Michael P. Richman, chairman of the bankruptcy practice group in the Manhattan office of Foley & Lardner, a law firm.
(Source: NY Times)
Join the official YWN WhatsApp status
One Response
“like duh!”
Financial services are the leading industry in New York. The financial services industry is collapsing, very loudly. So of course the result will be a big increase in unemployment and bankruptcies.
Don’t worry, Detroit’s leading industry is also collapsing, so maybe New York will have competition for more depressed urban economy.