One Richmond bankruptcy lawyer says personal and business bankruptcy filings are likely going to rise higher in coming months as credit remains tight and the economy sluggish.
Roy Terry, a bankruptcy attorney at Durrette Bradshaw, said his phone has been ringing twice as much in the last few weeks with anxious folks telling him about their struggles in all sorts of small businesses but with a high concentration in construction-related industries.
Terry is also a trustee of the U. S. Bankruptcy Court for the Eastern District of Virginia, Richmond Division. In that role, he helps clients liquidate assets to pay creditors.
Bankruptcy filings may not be a completely accurate judge of overall business failures because some businesses just disappear without filing anything, Terry said. However, the rise still portends a rough patch ahead.
“I did a hearing for one guy in a hauling business. He was put under by the quadrupling of diesel prices. The profit evaporated because of the cost of fuel,” Terry said.
The number of filings in the Eastern District of Virginia’s Richmond Division has hovered at around 600 filings per month for the last several months; 583 parties (households and or businesses) filed in September. That’s up 30% from September 2007.
A lot of the filers are coming from Fredericksburg area, Terry said. And a lot of personal bankruptcy fillings are in fact businesses that went sour, said he added.
In particular, a chain of three Cold Stone Creameries operating under the name I Scream, LLC, has filed Chapter 11 protection to drop an under-performing store in a Stratford Hills shopping complex. The owner did not wish to speak about his situation.
A Chapter 11 reorganization can allow a business to get out of a lease and emerge with more favorable terms of credit.
Aaron Kremer is the BizSense Editor. Please send story ideas to [email protected]