N.M. Business-Related Filings decline to Pre-Recession Levels

ALBUQUERQUE, N.M. — Business-related bankruptcies dropped last year in New Mexico to the lowest level since the pre-recession days of 2007, according to a new report from the Administrative Office of U.S. Courts.

There were 182 business-related petitions for Bankruptcy Court protection filed statewide in 2012, down by 10 percent from 203 in 2011 and down by 40 percent from the most recent high of 302 business-related petitions in 2009, the report says. The 182 bankruptcy filings in 2012 was the lowest since 142 in 2007.

For comparison, last year’s 40,075 business-related bankruptcies nationwide was a 16 percent drop from 2011 and a 34 percent drop from the most recent high set in 2009.

The vast majority of business-related bankruptcies, both here and around the country, are not filed by incorporated businesses but rather by individual consumers. Most of them are small-business owners who personally guaranteed loans and other forms of debt incurred on behalf of their failed or failing businesses.

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Their bankruptcies are classified as business because the consumer checks a box on his or her petition that says the majority of the debt is related to a business.

In New Mexico, 134 of last year’s 182 business-related bankruptcies, or 74 percent, were for a Chapter 7 liquidation of assets. Three were Chapter 13 petitions, a typically consumer filing in which an attempt is made to pay off the debt, and two were Chapter 12, a form of bankruptcy limited to “family farmers.”

Another 43 were for a Chapter 11, which typically — but not always — involves a business attempting a financial reorganization to pay off its debt over a period of years. Chapter 11 filings have hovered at around 42 a year since 2009.

Bankruptcy is largely the domain of financially insolvent consumers. Last year in New Mexico, business-related petitions account for 3.8 percent of the state’s 4,810 total bankruptcy filings. Nationwide, business-related petitions accounted for 3.3 percent of all filings.
— This article appeared on page B1 of the Albuquerque Journal

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