STATEWIDE — Business bankruptcies rose 67% in Oregon in 2008, as the growing financial crisis leaves businesses big and small struggling to stay afloat.
The U.S. Bankruptcy Court, District of Oregon recorded 405 commercial filings, up from 242 the year prior. And barely one month into the new year, bankruptcy and insolvency lawyers in Portland are already seeing an influx of filings.
“There are a number of things coming together to create an unprecedented situation,” says Perkins Coie partner Douglas Pahl. “It doesn’t feel like a normal cycle.”
While filings of each business bankruptcy chapter rose last year, the increase in organizations seeking Chapter 11 protection is especially notable. Chapter 11 filings rose to 61, nearly triple the 23 filings recorded last year. While protection under Chapter 11 is not limited to businesses and can include individual filings, the clerk’s office estimates that around 90% of the 61 are business filings.
While the recession has left few industries unscathed, the real estate and retail sectors were especially hard hit in 2008. Real estate developers including Renaissance Homes and Legend Homes were just a few to go into Chapter 11. Other businesses tied closely to the industry also felt the ripple effects. Contractors, engineers, and even some lawyers took a hit when Oregon’s major real estate developers sought bankruptcy protection.
Industry experts predict that the growing swell in retail business insolvencies could turn into a full-on flood in 2009. Post-holiday profit drops paired with a slowdown in consumer spending will continue to challenge many retailers’ financial viability.
Tightened credit markets are proving especially troublesome to business owners on the verge of bankruptcy and those already entrenched in reorganization or liquidation proceedings. Debtors are finding it nearly impossible to refinance, sell or find outside parties interested in acquiring their businesses. “The credit markets are not there to provide an alternative,” says Pahl.
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