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Alexandria, Va. — The American Bankruptcy Institute (ABI) sent a letter to Senate Judiciary Committee leadership on Friday supporting S. 473, the "COVID-19 Bankruptcy Relief Extension Act," to extend, for another year, bankruptcy-relief provisions due to sunset in the 2020 CARES Act and December 2020 omnibus appropriations bill. “There is no doubt that the COVID-19 pandemic and its aftermath will continue to put significant strain on U.S. small businesses in the near future and perhaps for years to come,” ABI Executive Director Amy Quackenboss writes in the letter to bill co-sponsors Senate Judiciary Chairman Richard Durbin (D-Ill.) and Ranking Member Charles Grassley (R-Iowa). “By extending the increased debt limit of the SBRA, the COVID-19 Bankruptcy Relief Extension Act offers much-needed relief to a growing number of U.S. small businesses who find themselves in need of reorganizing in order to stay in business.”

Click here to read ABI’s letter.

Prior to the start of the pandemic, the “Small Business Reorganization Act of 2019” became effective on Feb. 19, 2020, creating the new subchapter V election to make it more cost-effective and efficient for small businesses to reorganize under chapter 11. With the passage of the CARES Act on March 27, 2020, the subchapter V debt eligibility limit was raised from its original amount of $2,725,625 to $7.5 million, with a sunset date of March 27, 2021. “This debt limit increase offered a favorable alternative to companies that may have otherwise been forced to shutter and liquidate as a result of the economic strain caused by the COVID-19 pandemic,” Quackenboss writes in the letter.

Sens. Durbin and Grassley introduced the bipartisan S. 473 on February 25, 2021, aiming to extend, by a year, the bankruptcy provisions passed last year for struggling families and small businesses facing the financial challenges due to the COVID-19 pandemic. In addition to ABI, the bill is being supported by the American College of Bankruptcy, the Association of Insolvency & Restructuring Advisors and other prominent bankruptcy and restructuring organizations.

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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes nearly 11,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org.

Alexandria, Va. — Total bankruptcy 11 filings in February 2021 decreased 45 percent over the same period last year, according to data provided by Epiq. The 31,213 total filings in February 2021 were down from the 56,209 total filings in February 2020. Total consumer filings registered 29,261 in February 2021, also representing a 45 percent decrease from the 53,097 consumer filings recorded in February 2020. Total commercial bankruptcy filings decreased 37 percent to 1,952 in February 2021 from the 3,112 filed in February 2020. Commercial chapter 11 filings decreased 23 percent in February 2021 to 420 from the February 2020 consumer filing total of 548.

“While the COVID-19 pandemic continues to have a serious financial impact across the globe, the economic stabilization measures put in place by the government have enabled many distressed families and businesses to delay filing for bankruptcy,” said ABI Executive Director Amy Quackenboss. “Bankruptcy remains a proven shield for families and companies seeking protection from the lingering financial distress and economic uncertainty caused by the pandemic.”

Senate Judiciary Committee Chair Richard Durbin (D-Ill.) and Ranking Member Charles Grassley (R-Iowa) on February 25 introduced the “COVID-19 Bankruptcy Relief Extension Act” to temporarily extend the COVID-19 bankruptcy-relief provisions for consumers and small businesses enacted as part of the March 2020 CARES Act and December 2020 omnibus appropriations bill. As the provisions are set to sunset on March 27, 2021, Durbin and Grassley’s legislation would push the sunset dates for these provisions to March 2022. Among the provisions of the legislation is keeping the eligibility limit for small businesses electing to file for subchapter V under chapter 11 at $7,500,000 to provide more vulnerable businesses with a streamlined path for restructuring their debts. This eligibility limit for small businesses was increased from $2,725,625 of debt to $7,500,000 by the CARES Act.

“As further stabilization efforts are considered by Congress, this important legislation will allow more time for families and small businesses to utilize the important bankruptcy provisions of the CARES Act and December’s omnibus appropriations bill,” Quackenboss said.

The February 2021 bankruptcy filing total of 31,213 represented a 3 percent decrease from the previous month’s filing total of 32,312. February 2021’s 29,261 consumer filings also dropped 3 percent from the 30,263 filings recorded in January 2021. Commercial filings fell 5 percent in February 2021 from January 2021’s total of 2,049 commercial filings. Total commercial chapter 11 filings decreased 12 percent from the 479 commercial chapter 11s recorded the previous month.

The average nationwide per capita bankruptcy filing rate in February 2021 was 1.23 (total filings per 1,000 per population), a slight decrease from January 2021’s rate of 1.25. Average total filings per day in February 2021 were 1,643, a 44 decrease from the 2,958 total daily filings recorded in February 2020. States with the highest per capita filing rates (total filings per 1,000 population) in February 2021 were:

1. Delaware (3.09)

2. Alabama (3.03)

3. Nevada (2.57)

4. Tennessee (2.23)

5. Georgia (2.10)

ABI has partnered with Epiq in order to provide the most current bankruptcy filing data for analysts, researchers and members of the news media. Epiq is a leading provider of managed technology for the global legal profession. 

For further information about the statistics or additional requests, please contact ABI Public Affairs Officer John Hartgen at 703-894-5935 or jhartgen@abi.org.

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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes nearly 11,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abi.org.

Epiq, a global technology-enabled services leader to the legal services industry and corporations, takes on large-scale, increasingly complex tasks for corporate counsel, law firms, and business professionals with efficiency, clarity, and confidence. Clients rely on Epiq to streamline the administration of business operations, class action and mass tort, court reporting, eDiscovery, regulatory, compliance, restructuring, and bankruptcy matters. Epiq subject-matter experts and technologies create efficiency through expertise and deliver confidence to high-performing clients around the world. Learn more at https://www.epiqglobal.com.