January 26, 2012
By: John Clark
For the third straight year, the number of publicly traded companies filing for bankruptcy fell again, this time amounting to a 17 percent decline from the number of filings in 2010, according to numbers compiled by BankruptcyData.com.
According to reporting from the Los Angeles Times, which analyzed the data, 88 public companies filed for bankruptcy in 2011, which represented a 17 percent drop from the 106 filings in 2010, and a more significant 58 percent drop from the 211 bankruptcy filings in 2009.
The figures compiled by the bankruptcy website reportedly cover both Chapter 11 bankruptcy, which is designed to help companies restructure their finances, and Chapter 7 bankruptcy, which is used by both individuals and corporations.
In the corporate context, however, Chapter 7 is usually used by companies going out of business. The average asset holding of companies filing for bankruptcy in 2011 was $1.2 billion, which was a sharp increase from the average asset size of $840 million in 2010.
The largest company to file for bankruptcy in 2011 was Jon Corzine's MF Global Holdings Inc., which entered bankruptcy court under dire circumstances and accusations of billions of dollars in losses for investors. The company's filing represented the eighth-largest bankruptcy filing in U.S. history.
The former New Jersey governor's company, though, was not the only corporate giant that sought financial aid in bankruptcy court in 2011. AMR Corp., the corporate parent of struggling American Airlines, filed for bankruptcy late in the year, and Borders Group Inc. also sought bankruptcy protection.
Observers believe that the overall decline in corporate bankruptcies suggests that large companies are finally regaining their financial health after a rash of bankruptcy filings in the wake of the credit crisis in 2008 and 2009.
Other experts, however, believe that the declining trend will not continue, and predict that 2012 will see an upward spike in corporate bankruptcy filings as businesses continue to struggle with rising levels of debt.
The drop in corporate filings mirrors a recent decline in the number of personal bankruptcy filings, which fell by 12 percent last year, according to research from the National Bankruptcy Research Center.
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