Will Texas Chapter 11’s Increase in the Months Ahead?

December 9, 2012

Chapter 11 bankruptcies in Texas declined by a notable 39 percent from 2011 to 2012. This decrease in business bankruptcies is three times larger than the Chapter 11 decline nationwide.

 

What drove this decline in 2012? The reasons are many, but one of the most important is the Federal Reserve Bank’s monetary policy. By keeping interest rates at extreme lows, financially troubled firms are able to restructure debt outside of bankruptcy and acquire additional debt at affordable rates.

 

Will this trend change in the year ahead? Many bankruptcy professionals in North Texas believe that Chapter 11 bankruptcies will increase in 2013 as businesses and banks lose access to cheap money and are forced to recognize real and irreversible losses. When that time comes, it’ll be important for managers to know who to call and what to request.

 

Business bankruptcy, provided for in Chapter 11 of the Bankruptcy Code, is important for many businesses as a way of extending the life of the firm, protecting current employees and retirees, and putting the business on a firmer footing for the future. While equity holders may lose some value, prompt decisions can ensure that stockholders and partners may retain some of their investment.

 

The attorneys at Fears Nachawati are prepared to help you as you consider how to save your business. With years of experience and dedicated expertise, we’re ready to give you and your managers the advice you need. Contact our professionals today.

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