At the annual holiday luncheon of the Bankruptcy Committee of the Monroe County Bar Association in December, Rochester Judge John C. Ninfo asked the attorneys present why bankruptcy filings in the Western District of New York were down in 2010 compared to 2009. I will review that question in a later blog, but perhaps the judge should have asked why bankruptcy litigation - adversary proceeds - was waaaay down in Rochester - but not Buffalo - this past year. I did a quick scratch-pad analysis of all adversary proceedings filed in Rochester 2007 through 2010. According to my analysis, only 67 adversary proceedings (AP's) were filed in the Rochester division of the Western District of New York in 2010 (an adversary proceeding is a federal lawsuit filed in connection with a bankruptcy case.) In 2009, 119 AP's were filed in Rochester, so AP's dropped by more than one-third this past year.
As posted yesterday, bankruptcy filings in both Rochester and Buffalo are way down the pace of filings from a year ago. What could be the cause? The local economy is no better - or worse - than a year ago, and as bankruptcies are a lagging indicator of a recession, bankruptcy filings ought to be increasing rather than decreasing as our higher unemployment rates drag on.After my blog several local attorneys have pointed to a rather simple explanation as to why filings may be down: the anticipated change in exemption law. For six months now we have been waiting for New York to finalize the updating of the exemption law (see legislative updates for the latest). In the mean time, if a bankruptcy attorney is holding cases that would benefit from the change, this would decrease temporarily the number of cases being filed.It makes sense to me. If every active bankruptcy attorney has four or five cases on backlog, that would account cumulatively for the drop in local filings. If so, anticipate a big upturn in early 2011, whether or not the exemption law is enacted. My thanks to Rochester attorney Bill Neild for first suggesting this possible explanation to me.
Bankruptcy filings in both Rochester and Buffalo are significantly down from last year. When last we checked, on October 5, bankruptcy filings were about two weeks behind the pace set last year. Two months later, filings are a full month behind 2009's rate.Bankruptcy cases are numbered consecutively when filed, and the last case filed in November in Rochester was 2,866. Case 2866 was filed in 2009 on October 29, one month sooner. In Buffalo, case 5,107 was the last November 2010 filing. That case number a year earlier was filed October 30.Looking back in history, here is the date Rochester case 2,866 was filed:
2010: Nov. 30
2009: Oct. 29
2008: Nov. 3
2007: Nov. 15
2004: July 2 (last year before the 2005 change in the bankruptcy code)
1996: Oct. 2
1995: December 4The pattern is similar in Buffalo, with case 5,107:
2010: Nov. 30
2009: Oct. 30
2008: Nov. 18
2007: Dec. 21
2004: July 9
1996: Nov. 7
1995: (only 4,532 cases filed that year)The percentage of local bankruptcy cases filed in Buffalo as opposed to Rochester has increased slightly. Through November 30, 35.9% of all Western District of New York cases were filed in Rochester. In this percentage of Rochester/Buffalo cases continues to the end of the year, it will be the smallest percentage of Rochester cases in the recent past and represents a two percentage point drop over the past three years. In 2009 36.1% of WDNY cases were filed in Rochester; in 2008 37.1% were Rochester cases and in 2007 38.0% were filed in Rochester. In 2004, Rochester constituted 37.0% of all WDNY filings.
The Federal Courts have created a fascinating county-by-county map of per-capita bankruptcy filings in the United States over the past five years. The intensity of bankruptcy filings is indicated by color. By clicking different years, you instantly see the rise - or lack of rise - of bankruptcy around the country. While very interesting, the map over-emphasizes rural areas. Most people live in major metropolitan areas, which cover a tiny portion of the country at large. By putting your mouse pointer over individual counties, you can see the specific ratio of filings per year. This shows a very interesting pattern in different parts of the country, which I have analyzed below. First, I have disregarded the figures for the year October 1, 2005 to September 30, 2006. "BAPCPA", the revision of the bankruptcy code, went into effect October 17, 2005, at the start of that year. A huge surge of filings took place immediately before the new date, followed by a drought of cases immediately afterward, making for a very distorted year. In my analysis, I am starting with the year ending September 30, 2007, the first "normal" year following the enactment of BAPCPA. I start with our home town - Rochester - as a base of comparison. Over the past four years, bankruptcy filings here have been extraordinarily stable, and relatively low: Monroe County (Rochester), New York
2007: 2.65 per thousand residents
2010: 2.68 Our neighbors to the east and west (Syracuse and Buffalo/Niagara Falls) have also shown little change in bankruptcy filings the past four years, although the rate of filings are higher than Rochester: Onondaga County (Syracuse), New York
2010: 3.88 Erie County (Buffalo), New York
2010: 3.97 Niagara County (Niagara Falls), New York
Bankruptcy filings in both the Rochester and Buffalo Divisions of the United States Bankruptcy Court for the Western New York are down, compared to the past two years. Bankruptcy cases are numbered consecutively when filed, and on October 5, 2010, the 2,438th case of the year was filed in Rochester. Case 2,438 was filed on September 17 in both 2009 and 2008 in Rochester, while in 2007 that case number was filed September 28. In Buffalo, the 4,298th case of 2010 was filed October 5. Buffalo Case 4,298 was filed September 15 in 2009 and September 29 in 2008. In 2007, that case number was filed October 19. Of course, bankruptcy filings are still way down from 2004, the last 'normal' year before the bankruptcy code was substantially changed in 2005. Rochester case 2,438 was filed June 18 in 2004, while Buffalo case 4,298 was filed June 8 of that year. The last year in which Rochester case 2,438 was filed later than October 5 was in 1995 (October 18). That same year, Buffalo case 4,298 was filed December 12.36.2% of Western District of New York bankruptcy cases filed in 2010 through October 5 have been Rochester cases, and 63.8% have been Buffalo cases. This is approximately the same percentage as in previous years: in 2007 38.0% of WDNY cases were filed in Rochester; in 2008 37.1% were Rochester cases and in 2009 36.1% were filed in Rochester. In 2004, Rochester constituted 37.0% of all WDNY filings.
The number of filings in the bankruptcy court in Rochester NY are actually slightly behind the pace of the prior three years, as of March 5, 2010. As of that date, 432 bankruptcies were filed in Rochester. In comparison, Rochester case 432 was filed February 26 in 2009 and February 27 in 2008 and 2007. For the record, case 432 was filed February 9 in 2004, and February 3 in 2005, just before the 2005 changes in the bankruptcy code.
Case Number 09-23415 was the last case filed in the Rochester Bankruptcy Court in 2009, and case number 09-16043 was the last Buffalo case file this past year. Based on the case numbers, and the last case numbers in 2008, bankruptcies increased 3.0% in Rochester over 2008 (3,317 to 3,415) and bankruptcies in Buffalo increased 7.4% (5,615 to 6,043.)Between 2007 and 2008, Rochester bankruptcies increased 4.3% and Buffalo bankruptcies increased 8.4%.The percentage of WDNY cases that are filed in Rochester has declined the past three years:
2007 38.0% of WDNY cases were filed in Rochester
2009 36.1% In 2004, Rochester constituted 37.0% of all WDNY filings.
Accrding to several sources, bankruptcies in the United States rose 32% in 2009 compared to 2008. The Associated Press reported such a rise in a story dated January 4, 2009. The story reported the biggest increases were in the Western states of Arizona (77%), Wyoming (60%), Nevada (59%), and California (58%.)
Rochester Bankruptcy case filings, as of the evening of November 18, 2009: