Business Bankruptcy Numbers Continue Upward Trend

Nov. 28, 2007
A 7% increase over the second quarter of 2007.

In the third quarter of 2007, 7,167 businesses declared bankruptcy in the third quarter of 2007, bringing the total for 2007 to 20,152 according to the U.S. Bankruptcy Courts.

The third-quarter figure shows a series of upward trends, including:

  • A 7% increase over the second quarter of 2007
  • A 35% year-over-year increase from the second quarter of 2006
  • A 45% increase for the first half of 2007 in comparison to the first half of 2006
  • The number of business bankruptcies through three quarters of 2007 (20,152) now eclipses the total number for 2006 (19,695)

Accounts receivable insurer Euler Hermes ACI is forecasting a return to 30,000 business bankruptcies in 2007 -- a 51% increase over 2006. This follows a spectacular, but one-off, reduction in business failures last year, when the number of corporate insolvencies dropped by 50% due to a 2005 change in U.S. bankruptcy legislation.

"Businesses today are facing serious headwinds from a slowing economy and an increase in the cost of doing business," said Euler Hermes ACI chief economist Daniel C. North, who has said that the three most serious economic issues remain the effects of increased energy, raw material, and labor costs; the effects of monetary policy tightening by the Federal Reserve in 2004-2006; and the "decimated" housing market and its effects on consumers and businesses.

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