Bankruptcy Hot Spots Linger — Are You Surviving in One?

In virtually any downturn, bankruptcies certainly are a trailing indicator. That’s because companies hold on as long as they are able to, take their licks, and finally give up if they exhaust their resources.

Although economy has perked up a bit in the last nine months, bankruptcy rates in lots of cities continue steadily to climb, raising troubling questions for companies about whether their suppliers, partners and perhaps customers certainly are a good credit risk.

Considering that, many businesses slogged through 2008 and managed to get until this past year before their owners finally threw in the towel. Despite the fact that the economy was slowly turning by last fall, in ’09 2009 bankruptcies peaked at 60,837 nationwide, an American Bankruptcy Institute study found. It had been the biggest tally since 1993. For contrast, in 2006 there have been less than 20,000 bankruptcies.

As though that wasn’t scary enough, it seems our national bankruptcy wave might not have peaked yet. The first quarter saw more than 14,600 bankruptcy filings, more than last year at the same point.

A far more detailed study from Equifax shows these bankruptcies are concentrated specifically markets. For example, among the top 15 market areas for bankruptcies this past year, this season three markets reduced their bankruptcy rate enough to exit the list — the Oakland, Calif., area, Seattle, and the Washington, D.C., market.

Most California cities weren’t so lucky, however, and the Golden State remains the hardest-hit for bankruptcies. The market areas for LA, Riverside/San Bernardino, Sacramento, NORTH PARK, Santa Ana/Anaheim, and "the others of California" (regarded as one big market area), all made the top 15. L.A. topped the list with a lot more than 1,000 bankruptcies in the first quarter.

Other cities making the top 15 list with bankruptcies are Houston, Denver, Dallas, Chicago, Atlanta, and Portland, Ore. "The others of Oregon" also made the very best 15. Though it still made the list, Chicago’s bankruptcy rate transpired 20 percent, so hopefully the business enterprise climate there is beginning to heal.

Among smaller markets, the numbers go funny. Worst-small-market Springfield, Mass., for example, topped the list since it went from an individual bankruptcy to 17 — not necessarily enough data to draw any major conclusions. The marketplace with the best jump in bankruptcy cases in the first quarter was Manchester/Nashua, N.H., where that they had 130 companies go bust.

Equifax did also create a summary of the tiny markets with the cheapest bankruptcy rates. And the winners are: Hagerstown/Martinsburg, Md./W. Va.; Gainesville, Fla.; Charleston, W. Va.; Lafayette, La., and the Pensacola, Fla., area.

If you are worried about the companies you depend on for supplies going broke, or in the event that you sell to business customers, you should use the target="_blank"Altman Z-Score to predict the business’s likelihood of becoming insolvent. Or, if you need to, you should use it to judge your own company’s health. You will need some basic financial figures from the business, but considering that bankruptcies continue steadily to rise in lots of markets, it may be worth the time to check out

How are companies doing in your area? Are you still seeing newly shuttered storefronts? Leave us a comment and reveal whether you imagine bankruptcies have peaked in your market, or will continue steadily to rise this year 2010.

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