The number of bankruptcy filings by U.S. businesses surged 61 percent during the third quarter, to 11,504 filings from 7,167 in last year's quarter, underscoring the potent early pain from the global economic implosion.
Chapter 11 business filings jumped to 2,485 during the quarter, 76 percent higher than the 1,410 filings the prior year. Chapter 7 business filings increased to 7,927 during the latest three-month period, representing a 65 percent increase over the 4,816 filings during the similar period in 2007.
For the first nine months of 2008, the 29,960 business bankruptcies filed exceeded the total for all of 2007, according to the American Bankruptcy Institute.
For all types of U.S. bankruptcies, the number of quarterly filings rose 34 percent in the third quarter. For the first nine months, total filings were up 35 percent to 841,496, compared to the 622,999 filings during the same period in 2007.
"The dramatic spike in both personal and business bankruptcies reflects an economy in distress, with worried consumers over-extended and unable to supply the spending typically needed to keep the national economy going," said ABI Executive Director Samuel J. Gerdano.
Business filings for the trailing 12 months ended Sept. 30 totaled 38,651, up 49 percent from the 25,925 bankruptcy petitions in the prior trailing 12 months.
Overall, there were more than one million bankruptcy filings for the latest trailing 12 months, up more than 30 percent from the same period in 2007.
Chapter 7 is designed to achieve a fair distribution to creditors of the debtor's available non-exempt property, with unsecured debts that not reaffirmed being discharged to provide the filer a fresh financial start. Under Chapter 11, filers are aided in rehabilitating a business as a going concern, or reorganizing an individual's finances, through a court-approved reorganization plan.