Number of U.S. Bankruptcies Continues Upward
- Nov 10, 2010
November 10, 2010
By Dees Stribling, Contributing Editor
More than 1.22 million U.S. bankruptcies were filed for during the first nine months of 2010, an 11 percent increase compared with the same period last year, according to the American Bankruptcy Institute, citing data released by the Administrative Office of the U.S. Courts. Of that total, more than 1.17 million were consumer filings, which representing a 12 percent increase from the same period in 2009.
Business bankruptcies, on the other hand, were down for the first three quarters of 2010 compared with the same period last year, dropping from 45,510 to 43,016. Both Chapter 11 and Chapter 7 bankruptcies were down for businesses.
“As the economy looks to climb out of the recent recession, businesses and consumers continue to file for bankruptcy to regain their financial footing,” Samuel J. Gerdano, the institute’s executive director, said in a statement. “With unemployment hovering near 10 percent and access to credit remaining tight, total filings in 2010 will likely exceed 1.6 million.”
GGP Emerges From Chapter 11
General Growth Properties, the number-two mall owner in the nation, saw its 19-month Chapter 11 bankruptcy end on Tuesday, along with the spilling off a new entity whose stock will begin trading on Wednesday. The spinoff is Howard Hughes Corp., which operates residential and other properties, such as the retail, dining and entertainment complex South Street Seaport in downtown Manhattan.
The bankruptcy enabled GGP to tank up with $6.8 billion in new equity capital from the likes of Brookfield Asset Management Inc., Fairholme Funds Inc., Pershing Square Capital Management L.P. and the Teacher Retirement System of Texas. Pershing Square Capital, headed by Bill Ackman, did especially well out of the deal by buying a lot of GGP stock on the cheap (about $1 a share). On Tuesday, GGP stock ended the day at $17.39 a share.
General Growth was one of the larger examples of a company–and the largest example of a REIT–caught unawares by the sudden credit freeze that helped make the fall of 2008 a time that everyone wants to forget. It suddenly found that billions worth of its debt were un-refinancable. Unusually, the REIT’s creditors were paid in full during the bankruptcy, and its equity investors, who often lose their shirts in such situations, got a “substantial” recovery on their claims, according to GGP.
Mortgage Delinquencies Forecast to Edge Upward
Foresight Analytics, a division of commercial analytics firm Trepp, is predicting–ahead of the official FDIC numbers later this month–that 3Q10 residential mortgage delinquencies will increase by 10 basis points from 2Q10 to 13.3 percent, while commercial delinquencies will increase by 20 basis points to 5.6 percent, and bum construction loans will increase 30 basis points to 19.5 percent.
Wall Street had a down day on Tuesday, perhaps flummoxed by all the growling by G20 members ahead of their meeting later this week, with the Dow Jones Industrial Average dipping 60.09 points, or 0.53 percent. The S&P 500 lost 0.81 percent and the Nasdaq declined 0.66 percent.