By Gregg Morin, Vice President of Business Development and Revenue, Epiq Bankruptcy
Bankruptcy filing statistics are important, but they only scratch the surface when it comes to assessing overall trends in the world of distressed businesses. Gregg Morin identifies some of the other metrics that matter and delves into what they’ve shown about 2022 so far.
While new filings tend to be the main indicator of what’s happening in the bankruptcy market, this data can be deceiving, as depending on your business, there are multiple other factors to consider. In addition, even though large law firms are seeking new filing trends to identify where to focus marketing efforts or where they should reduce or increase staff, loan servicers want to know the delta between the number of new monthly bankruptcy filings and the number of cases that are closing each month.
Not since 2010 have there been more new filings in a year than cases that were closed (see graph one), and it’s trending that way again in 2022, as there have been 61,857 more cases closed than were opened through October 2022 compared to the same time period in 2021 (see graph two). As new filing trends start to increase, servicers won’t feel the impact until there are more new cases opening than cases are closing.
In addition to the bankruptcy trends above, some others of business interest include the average length of time it takes for a case to close, discharge or dismiss, as it varies greatly by state, court, lawyer, law firm, trustee and judge as well as case count volumes. A few examples include:
- The average number of days for Chapter 13 cases that have closed in 2022 by state range from 1,564 to 969 days. The average number of days for discharges ranges from 1,805 to 1,347 days and the average number of days for dismissed cases ranges from 891 to 288 days.
- The average number of days for Chapter 7 cases that have closed in 2022 by state ranges from 1,122 to 172 days, while the average number of days for discharges ranges from 259 to 101 days and the average number of days for dismissed cases ranges from 676 to 39 days.
- The highest number of 2022 new cases assigned to a judge through October is 2,284, while the average is 948.
- The highest number of 2022 new cases assigned to a trustee through October is 3,547, while the average is 280.
- The attorney with the greatest number of new cases filed in 2022 had 2,471 through October.
- The law firm with the greatest number of new cases filed in 2022 had 5,518 through October.
- There have been 20,750 new cases filed without a bankruptcy attorney in 2022.
As evidenced by this data, there is far more value in bankruptcy metrics to businesses than just new filing trends. Stakeholder (lawyer, law firm, trustee and judge) caseloads, case disposition durations, geography differences, court differences, chapter differences and commercial and individual metrics can each provide unique value depending upon your business.
Gregg Morin is vice president of business development and revenue for Epiq Bankruptcy. He can be reached at email@example.com.