Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, November 24, 1995 TAG: 9511240039
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
DATELINE: LENGTH: Medium
Bankruptcies are running at a record pace in the Western District of Virginia, and the federal court's clerk predicts filings could set a record for the year with nearly 7,000 cases.
But John W.L. Craig II, clerk of the U.S. Bankruptcy Court in Roanoke, is at a loss to explain why so many cases are coming - just as the staff has been cut back to 73 percent of normal.
"The Dow hits 5,000," the clerk said, "and I have a record number of bankruptcies."
Craig this week reported on the court's third-quarter filings. It was, he said, the 10th consecutive calendar quarter to show an increase in the number of individuals and businesses seeking protection from creditors.
Craig said he once found that bankruptcies increased in proportion to the number of new business licenses issued, suggesting that entrepreneurs take financial risks when the economy is good.
Whether or not that correlation still holds, it doesn't seem to be a primary cause this time. The number of businesses filings is the lowest in a long time, Craig said, and the number of corporate financial reorganizations is "extremely low."
Individuals are filing the bankruptcies despite the good economic environment, he said, and the number in October and so far in November is "the largest we've ever had" for those particular months. It's hard to correlate that with economic factors, he said.
"I'm absolutely stumped ... I'm baffled," Craig said.
Projecting total petitions for the year based on bankruptcies filed through the end of September, he estimated 6,997 cases probably will be filed. If the trends hold, that would top the record of 6,846 set in 1991. The number has risen steadily since 1993.
Filings in the district through the first three quarters were up 19.3 percent from last year. The overwhelming number were liquidations.
Although Roanoke has the highest number of filings of any court in the district, Roanoke petitions increased 17 percent, compared with a 19.5 percent increase in Lynchburg and 26.2 percent in Harrisonburg. Craig said the Harrisonburg court serves many counties that are bedroom communities for the Washington, D.C., area. The Roanoke court handles all of Virginia southwest of Roanoke.
by CNB