Bankruptcy Filings of Texas Businesses Have Declined

by San Antonio Attorney

The bankruptcy filings of businesses in Texas have dramatically decreased in the first half of 2012.

But the experts are saying that the bankruptcy courts in Texas will probably experience another wave of business bankruptcy filings under Chapter 11 if the economy recovers. If the economy does not get better, the courts would possibly see more filings for Chapter 7 liquidations.

The total number of Chapter 11 filings in the first six months of 2012 is 308, which is 39 percent less than last year. On the other hand, Chapter 7 filings of corporation were down 11 percent in four federal districts of Texas.

There were 119 business bankruptcies in the Northern District, down 30 percent compared to last year. The decline nationwide is 12 percent.

The declines were results of the monetary interest rate policy of the federal government, the state’s economy is strong and the fact that many businesses in Texas have filed for Chapter 11 protection outside of the state’s jurisdiction, according to Bill Wallander from Vinson & Elkins in Dallas.

There are still many companies in Texas that are on the brink of bankruptcy, said the legal experts. Filing for Chapter 11 bankruptcy would be a significant help to them.

Many bankruptcy lawyers are saying that banks are presently avoiding taking considerable financial risks by putting money in reorganizations. However, they also do not want companies to shut down. The financing needed to exit bankruptcy is hard to get but companies are able to borrow smaller loans that allow them to procrastinate.

According to the bankruptcy lawyers, there have been numerous extension negotiations between lenders and borrowers. However, the time will come that their money will run out, according to the bankruptcy lawyers. As of now, the bankruptcy filings are being delayed, instead of fixing the problem of debt.

 

-  There is a common misconception that bankruptcy means liquidating or losing all of a debtor’s nonexempt assets to pay off debts. The truth is the bankruptcy laws also offer an opportunity for the debtor to recover. By filing for Chapter 11 reorganization, a debtor would be able to continue the business by making an agreement with the creditors. However, Chapter 11 is a complicated process so you would want to hire a San Antonio Attorney who specializes in bankruptcy cases to help you go through it.

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