Over the last several weeks, I have been researching the 2016 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) Report’s data for insights into how New York bankruptcy debtors compare to debtors nationally. This post will focus on characteristics of chapter 11 Brooklyn bankruptcy and chapter 11 New York bankruptcy cases filed in 2016. The BAPCPA Report only includes cases filed by individual debtors with primarily consumer debts, so the information presented here may not be indicative of typical chapter 11 cases. Fortunately, it will tend to reflect cases filed by smaller businesses rather than large corporations.
(Click to read, “Who Are Chapter 7 Bankruptcy Debtors?” or, “Who Are Chapter 13 Debtors?“)
The BAPCPA Report has nine tables in all, but most of them are not relevant to chapter 11 cases, and some are downright trivial, e.g. attorney or creditor misconduct (it’s rare). The tables are also not necessarily informative in order, so as with my articles on chapter 7 and chapter 13, I will start with Table 3, “Time Intervals From Filing to Closing of Individual Debtors’ Cases” for those ending in 2016, which gives an idea for how long a chapter 11 case takes. The three rows in the tables refer to all chapter 11 cases, those in the Eastern District of New York (Kings (Brooklyn), Richmond (Staten Island), Queens, Nassau, and Suffolk counties), and those in the Southern District of New York (New York County, Bronx County, and six mid-state counties to the north).
| Circuit and District | Total | Chapter 11 | ||||
|---|---|---|---|---|---|---|
| Number of Cases | Interval in days | Number of Cases | Interval in days | |||
| Mean | Median | Mean | Median | |||
| TOTAL | 844,549 | 592 | 156 | 996 | 760 | 590 |
| NY, E | 11,128 | 253 | 102 | 23 | 379 | 268 |
| NY, S | 6,913 | 392 | 118 | 21 | 941 | 708 |
Because chapter 11 is crucial for many business owners, as it’s notoriety in popular culture suggests, it’s quite rare. About one-tenth of 1 percent of all consumer bankruptcies are filed in chapter 11. Again, these cases are not major corporations that splash the business sections. Instead they’re smaller, if sophisticated businesses. Glancing at my post on how many people file New York bankruptcy each year, well over 80 percent of chapter 11’s in the Eastern District are predominantly business-debt cases, and in the Southern District, it’s almost 95 percent.
Interestingly, although only a couple dozen consumer chapter 11 cases occur in both the major New York districts, they account for higher proportions of their total bankruptcy case loads: 0.2 percent in the Eastern District and 0.3 percent in the Southern District. Both account for about 2 percent of all personal chapter 11 cases nationally. Readers familiar with business bankruptcy will probably wonder how New York compares to other big-business bankruptcy courts. New Jersey had 34 chapter 11’s and Delaware had only one. Meanwhile, the Central District of California had 160.
Chapter 11 cases tend to go longer in the Southern District than the national average, both mean and median. However, the Eastern District’s cases take about half as long. The time lengths are a bit more difficult to evaluate because chapter 11 differs so much from the more common chapters. People familiar with chapter 7 would expect such cases to only take a few months, and the three-to-five-year repayment plan in chapter 13 gives debtors a benchmark to compare their timelines against. Chapter 11 is less predictable, so the raw comparison indicates that the Southern District’s cases are influenced by larger debtors.
The 2016 BAPCPA Report is here.
I have more to say about chapter 11 bankruptcy cases, but that can wait for another time. If you or your business is experiencing financial difficulties, and you believe chapter 11 will work better for you than a typical consumer bankruptcy, then it is essential to consult with an experienced New York bankruptcy lawyer before deciding how to proceed.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy attorney Bruce Weiner for a free initial consultation.
