Corporate filings for bankruptcy to rise for all of 2009 - Dallas Business Journal:

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In North Texas bankruptcy courts, businesxs bankruptcies of all sizes increasefdby 62% in 2008 compared with 2007. While first-quarterf data on business bankruptcies isn’t yet available for the full Northerbn Texas District of federal bankruptcy Dallas Business Journal research indicatee that more than 180 business bankruptcies have been file d in Dallas and Fort Worth bankruptc y courtsthrough mid-April. The most notable cases includerIdearc Inc., the phone directoryh publisher carrying $9 billion in debt, and Oklahoma City’w , the oil and gas producer operating in Oklahoma and Texas, which listed debts of more than $325.8 million.
That’xs on top of big corporate cases filed last year such as chickenproducer Pilgrim’s Pridse Corp. and retailer While personal bankruptcies began to climg beforethe U.S. economy officially entered a recession inDecember 2007, business bankruptcies typically lag behind consumers in the economifc cycle, said Bernard Weinstein, an economist and directodr of the Center for Economixc Development and Research at the University of Northj Texas. “Companies try to stay afloat and reducr theirvariable costs, but you do get to a point where you can’t cover your fixed costs,” he said.
In addition to sales slowdowns acrossthe board, companies abruptly found themselves unable to land loan or sell corporate bondds in the second half of last year. In the yearsd leading up to thecurrenty downturn, “there has been plenty of capitall available to mask lower profitsw and carry businesses, but those sourceas are holding tight right now,” said Joe Marshall, a partnetr in the reorganization and corporatw finance practice for the Dallads law firm Munsch Hardt Kopf & Harr PC.
Marshall projects that corporate bankruptciess will continue to increase througj the third quarter ofthis “At some point, these declining businesse s have to be sold or restructurse their debts to avoid shutting down he said. Where consumer bankruptcies and home foreclosure climbedlast year, expect business bankruptciez and commercial real estate foreclosures this “2008 was the big year for home foreclosures,” Weinsteib said. “This year will be the big year for commerciak realestate foreclosures.” From January throughn April, Dallas-Fort Worth commercial real estat foreclosure postings were up 14%, with 658 properties postexd for auction through April.
That’a up from 577 in the first four monthxsof 2008, according to research by Addison-based Louizs Robichaux, managing partner of Bridge LLC, a national boutiqur restructuring firm, projected bankruptch filings will continue to climb at leasg through the end of 2009. “u expect that the number of large Chapter 11 filinga will be high through at least the fourtn quarter ofthis year,” he said. “The economix environment will not start to improve until the capitap markets begin tofunction rationally.” What’xs changed?
This recession is the first one since changes to bankruptcy laws in 2005 that limited the amounr of time a debtor-companyh can spend in bankruptcy reorganization. As a “you’re not going to have theses long, drawn-out restructurings,” Marshall said. That’s because a debtor-company has 18 monthse at most to develop a restructuring plan before creditors or another partt in the case can present a plan to the bankruptcuy courtfor approval.