Total weekly bankruptcy filings dip by 33.4 percent from 2019

Total Filings

Total filings were down by 33.4 percent during the week ending December 6 compared to the same week in 2019. Once again, the largest decline involved chapter 13 filings, which were down by well over one-half from last year.

Chapter 11 Cases

The 169 chapter 11 filings were up from the 145 filings during the same week last year. The increase, however, is largely due to the higher number of cases filed that had numerous related cases filed by corporate subsidiaries. 

Subchapter V Elections (Small Business)

The Small Business Reorganization Act of 2019 (SBRA), which took effect on Feb. 19, created subchapter V through chapter 11 to provide a streamlined and cost-effective option for small business debtors. The 59 subchapter V cases filed during the week were the most filed in a single week since subchapter V became available in February 2020. A total of 1,269 such cases have been filed in the nine months since it has been available.

Subchapter V Debt Limits

The initial debt ceiling for subchapter V eligibility was $2,725,625. On March 27, 2020, the CARES Act raised the debt ceiling for subchapter V eligibility to $7,500,000. Absent further congressional action, the threshold will return to $2,725,625 after one year.

There were 759 subchapter V cases filed in the six months from the time the debt limit was raised to the end of Fiscal Year 2020 (September 30, 2020). Information on liabilities was available for 548 of these subchapter V cases. Of these cases, 157 (28.6 percent) involved debtors whose liabilities exceeded the original limit of $2,725,625. These debtors would not have been eligible for subchapter V without the temporary increase provided by the CARES Act.