VOL. 115 | NO. 204 | Friday, November 30, 2001
Chapter 11 bankruptcy cases more than doubles this year
Firms filing bankruptcy surpass 2000 levels
By SUE PEASE
The Daily News
The number of Chapter 11 bankruptcy cases filed so far this year in the Western District of Tennessee is almost double the amount of Chapter 11 cases filed here during all of 2000.
Through Nov. 27, 152 Chapter 11 cases filed, compared to 79 Chapter 11 cases were filed during 2000, according to petitions filed in the U.S. Bankruptcy Court for the Western District of Tennessee compiled by the Daily News Online.
Although the numbers at first seem to indicate a sharp spike in companies filing Chapter 11, otherwise known as reorganization or bankruptcy protection, legal experts recommend looking closely at the numbers before determining a trend.
"There is a trend in a sense that nationally, with the last numbers I saw, Chapter 11 is up a bit," said Judge William Houston Brown, who presides over the U.S. Bankruptcy Court of the Western District of Tennessee.
"There are always some aberrations a lot of the reasons for the (large) number of filings this year relate to the number of cases that really amount to one case."
One example of multiple bankruptcy petition filings is the Snyder Homes case, to which Brown was assigned.
Local homebuilder Snyder Home Builders LLC filed for Chapter 11 bankruptcy earlier this year and filed roughly 20 cases, Brown said.
The company is in the process of liquidating its assets.
A company may have multiple case filings if it has other subsidiary corporations or affiliated entities. Legally, each affiliated company must have a separate filing.
While Synder Home Builders was an example of a single company having many bankruptcy filings, another example of multiple filings this year is VisionAmerica Inc.
VisionAmerica Inc., which performed refractive vision correction procedures through eye centers located in the Southeast, recorded at least 26 bankruptcy filings, said John R. Dunlap, the attorney representing the company.
The larger number of filings is similar to those seen when another health care related company, MedShares, filed for Chapter 11 in 1999. A total of 128 cases were filed on MedShares behalf, he said.
While large companies with many related entities are one reason for the growing number of filings this year, the recession has had an impact, legal experts said.
"I do think there is some increase related to the economy, especially with smaller Chapter 11 debtors who were struggling for whatever reason before," Brown said.
Dunlap agreed the economy could be one factor.
However, many companies or individuals delay seeking bankruptcy protection as long as possible, so there could be a lapse in time before seeing an increase in bankruptcy proceedings, if it were to happen.
"Just because the economy is in a downturn, doesnt mean that you will see a rash of filings tomorrow," Dunlap said.
"But, this (downturn) has been going on for a while."