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Bankruptcy filings trail in August


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POSTED: Tuesday, September 01, 2009

Bankruptcy filings in Hawaii slowed to 253 in August, rising 35.3 percent, the lowest rate increase so far this year and the lowest since April 2008 when filings rose 20.6 percent from the previous year.

As was typical, the majority of the preliminary filings were Chapter 7 liquidation cases.

Bankruptcy attorney David Farmer said while the rate of increase appears to be slowing down, the volume is still going up. August's numbers also could reflect a seasonal slowdown.

“;Overall, it's the same big question mark: Have we hit bottom?”; said Farmer. “;As far as the recession goes, I am under the distinct feeling we're seeing the slowdown in the month of August because it's summertime. A lot of folks are on break.”;

               

     

 

LOOKING FOR RELIEF

        Statewide filings through the past 12 months:
       

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
August 2009253
July 2009270
June 2009271
May 2009250
April 2009251
March 2009270
February 2009226
January 2009208
December 2008223
November 2008215
October 2008197
September 2008209
August 2008187

        Source: Office of the U.S. Trustee

If the rate of increase continues to drop in September, however, Farmer said it could mean the state has turned the corner.

“;I think it's too early to celebrate,”; Farmer said in one breath , then added, reflecting ambivalence, “;It's certainly a hopeful sign.”;

As of early yesterday evening, four Chapter 11 cases, 45 Chapter 13 cases and 204 Chapter 7 cases had been filed for August. Chapter 11 cases involve business reorganizations, while Chapter 13 cases are for individuals with a regular source of income who set up a plan to pay creditors over time.

The number of Chapter 7 cases was up 44.7 percent compared WITH last August.

The number of Chapter 13 cases was one less than last year, while there were four Chapter 11 cases versus none a year ago.

Farmer said more individuals are having a hard time paying off mortgages due to unexpected job losses, while property values also have been declining.

Some homeowners have only a modest amount of equity in their homes, he said, while others are “;underwater,”; meaning they owe more mortgage debt than the home is worth.

Among them are highly educated professionals who never thought they would file for bankruptcy, he said.

Further state job losses could propel a higher number of bankruptcy filings.

Although Hawaii reported no Chapter 11 cases filed a year ago, Hawaii Medical Center did file in August 2008, but in Delaware, and didn't transfer the case here until September.

Separately, resort-related real estate has been taking a hit on neighbor isles.

Sunra Coffee LLC, developers of a subdivision offering 5-acre “;gentlemen farm”; lots on the slopes of Hualalai, filed for Chapter 11 after foreclosure proceedings boggled potential sales.

Oceanfront Properties LLC in Kapaa also filed for Chapter 11 yesterday on a dozen vacation rental units on Kuhio Highway, listing between $1 million and $10 million in assets and liabilities. The building itself offered 200 units total.

Oceanfront Properties is behind on its mortgage to First Hawaiian Bank as well as its credit card payments and state taxes.

ON THE RISE

Bankruptcy filings in August increased from a year ago:

                                                                                                                                                                                                                                                                                           
 20092008% CHANGE
Chapter 7204141+44.7
Chapter 1140
Chapter 134546-2.2
Total253187+35.3
Chapter 7: Liquidation
Chapter 11: Business reorganization
Chapter 13: Individuals with regular sources of income set up plans to pay creditors over time.

Source: Office of the U.S. Trustee