U.S. Bankruptcy Courts - Judicial Business 2014

 Bankruptcy petitions may be filed under one of six chapters of the Bankruptcy Code. Most consumer petitions (i.e., petitions involving primarily nonbusiness debts), which this year equaled 97 percent of all petitions, were filed under chapter 7, through which non-exempt assets are liquidated and proceeds distributed to creditors, or under chapter 13, through which debtors with regular income retain assets and obtain court-confirmed plans to pay off their creditors. Three percent of all petitions filed in 2014 were business petitions, and most of them were filed under chapter 7, through which businesses cease operations and liquidate assets, or under chapter 11, through which businesses usually reorganize and continue operating. The three remaining chapters of the Bankruptcy Code—chapter 9 (which covers local governments and instrumentalities), chapter 12 (which covers family farmers and fishermen), and chapter 15 (which applies to foreign corporations and individuals)—collectively accounted for less than one tenth of one percent of all petitions filed this year.

Filings under chapter 7 fell 15 percent to 642,366 and constituted 67 percent of all filings, down from 68 percent in 2013 and 69 percent in 2012. Nonbusiness chapter 7 filings, which constituted 97 percent of all chapter 7 filings, also fell 15 percent and amounted to 67 percent of all nonbusiness filings, down from 68 percent in 2013 and 69 percent in 2012. Business chapter 7 petitions fell 19 percent and accounted for 67 percent of all business filings, the same as 2013.

Filings under chapter 13 decreased 9 percent to 313,262. These petitions equaled 33 percent of all filings, up from 31 percent in 2013 and 30 percent in 2012. The 310,914 nonbusiness chapter 13 petitions, a decline of 9 percent from 2013, accounted for 33 percent of all nonbusiness petitions, up from 32 percent in 2013. The 2,348 business chapter 13 petitions, a drop of 17 percent from 2013, represented 8 percent of all business filings, the same as 2013.

Chapter 11 filings declined 20 percent to 7,658. Chapter 11 cases, which typically require significantly more court resources than chapter 7 or 13 cases, accounted for 1 percent of all filings. The 6,504 business chapter 11 petitions accounted for 23 percent of all business filings, the same as 2013.

Although bankruptcy filings decreased nationwide, and all 12 circuits reported fewer filings for the fourth consecutive year, the rates of decline varied across regions. Districts within the Ninth Circuit in the western United States had a combined drop in filings of 22 percent. Reductions for the other circuits ranged from 7 percent in the districts of the Third Circuit to 14 percent in the districts of the Eighth and Tenth Circuits.

The Federal Judiciary has 90 bankruptcy courts, one in each judicial district except for the Districts of Guam, the Northern Mariana Islands, and the U.S. Virgin Islands (where the bankruptcy court is a division of the district court), and the Eastern and Western Districts of Arkansas (which share a bankruptcy court). Eighty-nine of the 90 courts reported fewer filings in 2014 than 2013; the only increase was in the District of Puerto Rico, where filings rose 3 percent. Eight districts reported declines of 20 percent or greater; six were in the Ninth Circuit—the Northern District of California (down 29 percent), District of Alaska (down 28 percent), Eastern and Central Districts of California (each down 27 percent), District of Hawaii (down 22 percent), and Southern District of California (down 20 percent)—and the others were the District of Colorado (down 23 percent) and District of New Hampshire (down 20 percent).

After the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 took effect, a steep reduction in bankruptcy petition filings occurred. Filings thereafter rose from 2007 to 2010, but have fallen in each of the last four years. The number of petitions filed in 2014 was 40 percent below the number filed in 2010.

The complex relationship between bankruptcy and other economic indicators—including unemployment and consumer confidence—means that the continuing decline in bankruptcy filings is not necessarily tied to or reflective of broader economic well-being. Filings may rise when consumers and businesses with increased access to credit and greater confidence about their economic prospects (generally considered positive economic developments) overextend themselves financially; filings also may rise when unemployment increases or more debtors seek to forestall foreclosures (generally considered negative economic developments). Conversely, filings may fall in response to lack of access to credit, lower consumer confidence, lower unemployment, or fewer foreclosures. Therefore, interpreting a decline in bankruptcy filings as either a positive or negative economic indicator is problematic.

For data on activity in the U.S. bankruptcy courts, see the F series of tables.

Percent Change in Bankruptcy Filings, 2013-2014

Data are for the 12-month periods ending September 30, 2013 and 2014. Data for an individual district may be viewed by mousing over that district.

Adversary Proceedings

Adversary proceedings are separate civil lawsuits that arise in bankruptcy cases, including actions to object to or revoke discharges, to obtain injunctions or other equitable relief, and to determine the dischargeability of debt. Adversary proceedings may be associated with consumer bankruptcy cases, but most arise in cases filed under chapter 11. They generally reflect the level of chapter 11 bankruptcy petitions filed two years earlier.

In 2014, filings of adversary proceedings declined 18 percent to 36,488 (down 8,067 proceedings). This was 48 percent below the total for 2010. Sixty-seven districts reported lower filings; 39 districts had reductions of 20 percent or more. In the District of Delaware, filings fell by 1,837 (down 65 percent). That district previously had received a number of “mega cases” (i.e., bankruptcy cases involving at least $100 million in assets and 1,000 creditors). The second-largest numeric reduction occurred in the Central District of California, where filings dropped by 804 (down 26 percent); this was attributed to the overall drop in bankruptcy filings.

Filings of adversary proceedings grew in 22 districts. The largest numeric growth was in the Southern District of New York, where filings soared 80 percent (up 749 proceedings), with most arising from cases involving the Eastman Kodak Company. The Eastern District of Oklahoma was the only district where filings remained unchanged (21 proceedings).

Terminations of adversary proceedings declined 19 percent to 43,503. Pending adversary proceedings dropped 12 percent to 49,992.

Data on adversary proceedings in the bankruptcy courts can be found in Table F-8.