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Slowing bankruptcy filings could signal a flurry to come

NEW YORK, November 03, 2021 (GLOBE NEWSWIRE) – With bankruptcy filings falling across all industries in the third quarter of 2021, professionals expect a surge in activity over the next year, as shown the latest Polsinelli-TrBK distress index report. The overall number of files in the report is at its lowest since the reporting period – almost 11 years ago.

Overall, General Chapter 11 filings fell to their lowest since the second quarter of 2019, marking the third consecutive quarter of declining filings. Real estate deposits have stabilized, while healthcare is still well below benchmark.

“I do not recommend filing unless it is a defensive claim – one that will prevent a creditor from taking enforcement action, or offensive – an implementation of an agreement with lenders or other creditors, “said Jeremy Johnson, shareholder of Polsinelli, New Mexico Bankruptcy and restructuring lawyer and co-author of the report. “With the rapid decrease in deposits, we expect the number of deposits to increase. These situations include poorly drafted deals made to survive immediate problems, lenders continuing to work with borrowers despite restrictions, an uncertain post-COVID landscape, and a potential end to government support. ”

The Polsinelli-TrBK distress indices are the backbone of a series of quarterly research reports that use Chapter 11 filing data – bankruptcies with more than $ 1 million in assets – as a proxy to measure financial distress throughout the US economy; and distress blackouts specifically in the real estate and health care industries. It is the only current metric that tracks both Main Street and Wall Street statistics.

The report, released today by Am Law 100 Polsinelli, also highlights the economic distress in the real estate sector. The industry is still experiencing a slow and steady stream of bankruptcies as experts await the expected increase in filings from the post-pandemic lifting of the eviction moratoria.

Other important updates to the report include:

  • The Chapter 11 Distress Research Index was 48.94 for the third quarter of 2021. The Chapter 11 Index has declined by more than 17 points since the last quarter. Compared to the same period a year ago, the Index has fallen by more than 32 points and compared to the benchmark period of the fourth quarter of 2010, it is down by more than 51 points.
  • The Real Estate Distress Research Index was 21.68 for the third quarter of 2021. The Real Estate Index has declined by less than a point since the last quarter. Compared to the same period a year ago, the Index is down by more than seven points and compared to the benchmark period of the fourth quarter of 2010, it is down by more than 78 points.
  • The Health Services Distress Research Index was 88.33 for the third quarter of 2021. The Health Care Index is up 25 points from the last quarter. Compared to the same period a year ago, the Index has fallen by more than 380 points and compared to the benchmark period of the fourth quarter of 2010, it is down by more than 21 points. After having significantly exceeded the reference period in recent quarters, the index has been below the benchmark for the last two consecutive quarters.

The Polsinelli-TrBK Distress Indices track the increase or decrease in all Chapter 11 filings with over $ 1 million in assets since the fourth quarter of 2010. Unlike public markets, the Polsinelli-Distress Indices TrBK include both public and private companies, creating a broader economic view that can show developing trends on Main Street before they appear on Wall Street.

To access the full report, charts, and all past analysis, visit www.distressindex.com.

About Polsinelli
Polsinelli is an Am Law 100 firm with 900 lawyers in 21 offices across the country. Recognized by legal research firm BTI Consulting as one of the top firms for excellent customer service and client relationships, the firm’s lawyers deliver value through practical legal advice infused with business knowledge and focus. on healthcare, financial services, real estate, intellectual property, corporate litigation, labor and employment law and intermediary affairs. Polsinelli PC, Polsinelli LLP in California.


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