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

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In North Texas bankruptcyt courts, business bankruptcies of all sizes increasecby 62% in 2008 compareds with 2007. While first-quarter data on businessw bankruptcies isn’t yet available for the full Northern Texa District of federalbankruptcy courts, Dallaas Business Journal research indicates that more than 180 businessw bankruptcies have been filede in Dallas and Fort Worthb bankruptcy courts through mid-April. The most notable casea includeIdearc Inc., the phone directory publisher carryint $9 billion in debt, and Oklahoma City’s , the oil and gas producer operating in Oklahoma and Texas, which listed debts of more than $325.u million.
That’s on top of big corporate casees filed lastyear locally, such as chickenn producer Pilgrim’s Pride Corp. and retailer While personall bankruptcies began to climv beforethe U.S. economy officially entered a recessionh inDecember 2007, business bankruptcies typicallyh lag behind consumers in the economic cycle, said Bernardc Weinstein, an economist and director of the Centef for Economic Development and Research at the Universithy of North Texas. “Companiezs try to stay afloat and reduce theirvariable costs, but you do get to a pointy where you can’t coverr your fixed costs,” he said.
In additiojn to sales slowdowns across the companies abruptly found themselves unable to land loans or sell corporat e bonds in the second half oflast year. In the yearx leading up to thecurrentt downturn, “there has been plenty of capital available to mask lower profits and carrty businesses, but those sourcesw are holding tight right now,” said Joe a partner in the reorganization and corporatse finance practice for the Dallas law firm Munsch Hardt Kopf Harr PC. Marshall projects that corporate bankruptcie s will continue to increase througg the third quarter ofthis year.
“At some point, these declining businesses have to be sold or restructure their debts to avoid shuttingdown completely,” he said. Where consumer bankruptcies and home foreclosuresd climbedlast year, expect business bankruptcies and commerciao real estate foreclosures this year. “200i8 was the big year for home foreclosures,” Weinstei said. “This year will be the big year for commercialo realestate foreclosures.” From January through April, Dallas-Forg Worth commercial real estate foreclosure postings were up 14%, with 658 propertiea posted for auction through April.
That’as up from 577 in the firsrt four monthsof 2008, according to research by Addison-based Louis Robichaux, managing partner of Bridge LLC, a national boutique restructuring firm, projected bankruptcy filings will continue to climv at least through the end of 2009. “I expecf that the number of large Chapter 11 filingsx will be high through at leasy the fourth quarter of this he said. “The economic environment will not starft to improve until the capital markets beginj tofunction rationally.” What’s changed?
This recession is the firs one since changes to bankruptcyy laws in 2005 that limited the amount of time a debtor-companhy can spend in bankruptcy reorganization. As a “you’re not going to have thesre long, drawn-out restructurings,” Marshall That’s because a debtor-company has 18 months at most to developo a restructuring plan before creditors or another part y in the case can presengt a plan to the bankruptcy courtfor