Fewer big companies file for bankruptcy

By Walter Hamilton

Jan. 9, 2012 12 AM PT

The latest encouraging economic statistic: Fewer big companies are going out of business.

The number of publicly traded companies filing for bankruptcy declined for the third straight year in 2011, to levels last seen before the 2008 global financial crisis, according to BankruptcyData.com.

A total of 88 public companies entered bankruptcy proceedings last year, a 17% drop from the 106 filings the previous year and down 58% from 211 filings in 2009, according to the website. The figures include both Chapter 11 petitions for companies seeking to restructure and Chapter 7 filings for those planning to liquidate.

Among the larger companies filing bankruptcy last year: MF Global, AMR Corp. (parent of American Airlines) and Dynegy Holdings.

The average size of last year’s bankruptcies was $104 billion, up 17% from 2010, largely because of the $41 billion bankruptcy of MF Global, the 8th-largest in U.S. history.

The data indicate that larger companies are regaining their footing after a spike in bankruptcy filings following the financial crisis.

But it’s unclear whether the trend will continue. Some experts predict a spike this year as companies that took on heavy leverage when credit was plentiful before the financial crisis could run into trouble as the debt comes due.

“I expect to see an increase in large bankruptcies in 2012 as some of the massive amount of debt that was issued before 2008 begins to come due,” said George Putnam, founder of BankruptcyData.com’s parent company.

The decline in large corporate filings parallels a recent drop in personal bankruptcies.

The number of Americans filing for personal bankruptcy fell 12% last year, as 1.35 million Americans entered Chapter 7 or 13, according to an analysis for the National Bankruptcy Research Center by Columbia Law School professor Ronald Mann.

That’s down from more than 1.5 million filings in 2010, when about one of every 150 Americans filed for bankruptcy. In 2011, the ratio was 1 in 175.

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Personal bankruptcies fall in 2011 to one out of 175 Americans