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Who Are Chapter 11 Bankruptcy Debtors? (Part 2 of 2)

(Click here to read, “Who Are Chapter 11 Bankruptcy Debtors?” part 1.)

This post continues my analysis of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) Report for 2016, specifically its data on chapter 11. Aside from displaying national information, these posts relate it to Brooklyn bankruptcy and New York bankruptcy. The report is a little light on detail, but it can help give a sense about what chapter 11 debtors are like. However, because the report only concerns itself with consumer bankruptcy cases, it might not be as illustrative as my earlier posts on chapter 7 and chapter 13.

This post turns to debtors’ financial circumstances, starting with Table 1B, “Assets and Liabilities Reported by Individual Debtors in Chapter 11 Cases With Primarily Consumer Debts.” The table shows data from the national level, the Eastern District of New York, and the Southern District of New York. I’ve modified it to show the mean averages of cases with complete schedules.

Circuit and District Cases Mean Assets Mean Liabilities Mean Net Scheduled Debt (in $s)
Total With Complete Schedules Total (in $s) Real Property (in $s) Personal Property (in $s) Total (in $s) Secured Claims (in $s) Unsecured Priority Claims (in $s) Unsecured Nonpriority Claims (in $s)
TOTAL 765 582 $1,839,402 $1,352,505 $486,897 $2,286,122 $1,600,608 $145,227 $540,287 $2,126,627
NY, E 30 21 $1,517,714 $1,304,476 $213,286 $2,397,286 $1,426,429 $2,238 $968,667 $2,393,286
NY, S 26 16 $5,583,000 $1,655,375 $3,927,625 $2,368,875 $1,487,938 $46,000 $835,000 $2,322,875

“Mean Liabilities,” here, includes debts on secured assets (like cars), unsecured priority claims (tax debts), and unsecured nonpriority claims (credit-card debt). The far right column, “Mean Net Scheduled Debt,” is the average amount debtors tried to discharge, if they had completed schedules.

Because there aren’t many consumer chapter 11 cases filed in New York, comparing the rates at which debtors file with completed schedules might be misleading on a year-to-year basis. Nevertheless, nationwide, the rate is about 75 percent, but in the Southern District it’s only 60 percent.

Although these chapter 11’s are technically consumer bankruptcies, they do reflect substantial assets and liabilities that are consistent with business bankruptcy. New York debtors seek to discharge more than $2 million on average, slightly more than the national average. Due to the low number of filers, it’s possible that a handful of cases are skewing these numbers.

The next table is Table 2B, “Income and Expenses Reported by Individual Debtors in Chapter 11.” This table is also modified to show mean averages of all cases with completed schedules rather than the aggregate number, which wouldn’t be very useful.

Circuit and District Cases Current Monthly Income Average Monthly Income Average Expenses
Total With Complete Schedules Median (in $s) Total (in $s) Median (in $s) Total (in $s) Median (in $s) Total (in $s)
TOTAL 765 611 $6,896 $9,625 $8,633 $11,813 $7,650 $9,827
NY, E 30 22 $9,507 $9,773 $10,078 $10,455 $7,554 $8,409
NY, S 26 18 $5,757 $7,167 $7,989 $9,611 $6,444 $8,278

“Current monthly income,” “average monthly income,” and, “average expenses,” appear in the bankruptcy forms. What stands out here is that debtors’ incomes are quite high, approaching $100,000 annually. Taken along with Table 1B, it’s clear that these debtors choose chapter 11 because they aren’t eligible to file in chapter 7 or chapter 13. They earn too much to pass the means test, and they owe too much to stay in chapter 13.

Unlike chapter 7 and chapter 13, the 2016 BAPCPA Report does not have tables specific to chapter 11 debtors, except for creditor or attorney misconduct, which is uninteresting. The 2016 BAPCPA Report can be found here.

Chapter 11 New York bankruptcy is not common, and the data from the report do not say a whole lot about the kinds of people who file it. What we do know from the few dozen people who do so every year is that they tend to have high incomes, substantial assets, and large debts. It would be helpful to know more about the businesses these debtors operate, but if your business is experiencing financial difficulties then talking to an experienced New York bankruptcy lawyer is crucial because chapter 11 is quite sophisticated.

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 bankruptcy attorney Brooklyn NY Bruce Weiner for a free initial consultation.

Rosenberg, Musso & Weiner, L.L.P
26 Court St # 2211
Brooklyn, NY 11242, USA
718-855-6840
http://nybankruptcy.net/

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