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Island Bankruptcies Decline In July

Business bankruptcy filings made up 53.3% of 510 cases filed last month


August 16, 2001
Copyright © 2001 CARIBBEAN BUSINESS. All Rights Reserved.

The number of local bankruptcies in July declined 17% compared to July 2000, according to information released last week by the industry newsletter Puerto Rico Bulletin.

During July 2001, 956 bankruptcies were filed locally, 197 less than July 2000’s total of 1,153.

At 510, commercial bankruptcies made up 53.3% of July 2001 filings, an increase of 90 compared to July 2000’s 420. However, only 446 personal bankruptcies were filed during July 2001 compared to a whopping 733 in July 2000.

Businesses with the most bankruptcy filings during July 2001 included grocery stores (24), construction contractors (37), cafeterias (35), clothing stores (21), and pastry shops (17).

The municipalities with the highest number of bankruptcy filings for the year as of July 2001 were San Juan (705), Ponce (526), Carolina (416), Caguas (341), Mayaguez (278), Arecibo (243), Toa Baja (192), Toa Alta (144), Guaynabo (148), and Vega Baja (170).

As of July 2001, there were a total of 8,510 bankruptcies filed for the year, a 3% decline when compared to the 8,778 cases filed during 2000 during the same period. Of that total, 5,949 are Chapter 13 filings, 2,497 Chapter 7 filings, and 64 Chapter 11 filings.

Contrary to stateside counterparts, most local debtors file Chapter 13 instead of Chapter 7 in order to pay their creditors. Chapter 13, frequently referred to as a "wage earner" chapter, allows them to set up a court-sanctioned payment schedule to satisfy creditors, while at the same time retaining their home and car, as well as protecting the credit and property of those individuals who have co-signed their loans.

Individuals who wish to free themselves of debt or businesses that wish to liquidate and terminate their ventures use Chapter 7 primarily.

Chapter 11, also referred to as reorganization, is generally used for business reorganization, although individuals may also file under it. Chapter 11 allows debtors to continue business operations as they strive toward a confirmed reorganization plan, which must meet statutory criteria.

Evolution of Puerto Rico Bankruptcies

During the month of July

Year Number of Bankruptcies
1991 791
1992 660
1993 540
1994 507
1995 534
1996 862
1997 1245
1998 1472
1999 1367
2000 1153
2001 956
Source: Puerto Rico Bulletin

This Caribbean Business article appears courtesy of Casiano Communications.
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