The number of personal and business bankruptcies filed last year in the country fell by nearly 30% from 2019 despite the economic distress caused by the COVID-19 pandemic, the Los Angeles Times reported. The decline was largely driven by a roughly 31% fall in personal bankruptcies but also a nearly 5% slide in filings due to business debts, according to U.S. Bankruptcy Court statistics. The court’s Central District of California — which includes Los Angeles, Orange and five other counties — has been no exception, experiencing a 27% decline in all cases, including a 15% decline in business-related filings. There was one record set last year, which was by the 62 public and private companies that had assets of $1 billion or more before filing for bankruptcy. That topped the 58 in 2009, according to New Generation Research, a Boston firm that operates the BankruptcyData website. However, a broader measure of corporate distress was less dire: There were only 110 publicly traded companies — including smaller ones not traded on major exchanges — that filed for bankruptcy. That was more than the 64 in 2019 but well under the 211 in 2009 amid the Great Recession or the 263 in 2001 after the tech bust, the BankruptcyData numbers show. “For a while, I was very convinced that [filings] were going to pop down the line, but 12 months into this they haven’t,” said ABI's Ed Flynn, who notes national filings were still down in the middle of March by some 45% compared with the same period last year when the pandemic-related shutdowns started. “People, mainly through government actions, have not yet felt the pain, and have not had the type of event that would precipitate a bankruptcy. They may not be paying their rent or their mortgage, but they are not being foreclosed on yet,” Flynn said. And for those debts not subject to any governmental restraint on collections there have been practical considerations, including a pandemic-related backlog in California state courts that have made it challenging for creditors to get judgments, L.A.-area bankruptcy attorneys say. Unless debtors are facing an immediate threat — such as a seizure of assets or garnishment of a wage — they will often avoid bankruptcy, which is costly and time-consuming in itself. “It’s a trustee looking into every transaction in your economic sock drawer. It’s just not a pleasant or good thing,” said L.A. bankruptcy attorney J. Scott Bovitz. “Individuals don’t tend to file bankruptcy unless they really, really need to. As long as there are a couple of dollars coming in the door from somewhere they tend to put it off.”
