Where Will Bankruptcy Strike in 2012?
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Where Will Bankruptcy Strike in 2012?

January 11, 2011


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The state of the global economy as we transition into a new year provides us with plenty of clues about what to expect from financial markets and bankruptcy courts in 2012, according to BusinessInsider.com. The news outlet suggests that current indicators (including the recent bankruptcy filings of MF Global, American Airlines, and other large companies) hint at what’s to come in 2012.

Industries that Might See Increased Bankruptcy Filings in 2012

The bankruptcy filing of restaurant and ice cream chain Friendly’s may have been prophetic, according to analysts. Sluggish growth in the restaurant and hospitality sector, coupled with Americans’ continued reluctance to return to frequent meals outside of the home, could mean more bankruptcy filings for the food industry.

Murmurings about a potential bankruptcy filing from sandwich chain Quizno’s in recent weeks seem to confirm this prediction. In other arenas, fluctuations in the prices of commodities such as cotton could mean distress for clothing retailers in the coming twelve-month cycle.

Partly because of rapid expansion between 2007 and 2009, clothing retail chains may be forced to downsize and/or close some of their locations as they reorganize their debts. Insiders predict that individually owned, boutique-style clothing retailers will be hit even harder than chains.

Finally, 2012 may well be the year that American cities and municipalities begin to file for bankruptcy protection in force. While it may seem as if 2011 was the year in which that happened, many sources suggest that the market conditions that prompted this year’s filings will only worsen in 2012 and lead more towns and cities to seek Chapter 9 bankruptcy protection.

Individual Bankruptcy Filings in 2012

How individual bankruptcy filers (and potential filers) are likely to fare in 2012 is less clear. Much of the country saw decreased bankruptcy filing numbers in 2011, but whether that trend continues into 2012 is as yet not quite clear.

Some analysts suggest that the personal bankruptcy filings likely peaked in 2010 and will start to steadily (but slowly) decline in the next few years; however, given the continually languid state of the employment market, personal bankruptcy filings could creep back up in the coming months.

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