Statewide bankruptcies, providing evidence that Hawaii's economy is on the mend, declined 4.8 percent in the third quarter as 40-year-low interest rates and a tourism rebound fueled recovery. Bankruptcies fall for quarter
in mixed economic pictureLow interest rates may also
be helping Hawaii bankruptcy filings
decline 9.3 percent this yearBy Dave Segal
dsegal@starbulletin.comA year ago, Hawaii econ-omists were unsure about what the future would bring after the terrorist attacks slowed tourism to a crawl, forced a cruise line's bankruptcy and put thousands of people out of work.
Today it's a different story.
In the first nine months of 2002, Hawaii bankruptcies fell 9.3 percent, with 3,488 filings compared with 3,847 during the similar period in 2001. The third quarter, which ended yesterday, saw 1,138 filings compared with 1,196 a year ago.
"The economy is in recovery so it's not surprising to see the bankruptcy numbers would be down," said Leroy Laney, professor of economics and finance at Hawaii Pacific University. "A year ago at this time, we had just had Sept. 11. We did have a recession as a result of that. We started emerging from it early this year so maybe the bankruptcy numbers are telling us something about that."
U.S. Bankruptcy Court clerk Mark Van Allsburg said a breakdown on the different chapter filings wouldn't be available for about a week.
However, he said that at the end of August Chapter 7 cases were down more than 9 percent from a year ago while Chapter 13 cases were off about 3 percent.
Chapter 7 involves the liquidation of a business' or consumer's assets while Chapter 13 involves an individual working out a repayment plan to creditors and generally paying a certain percentage on the dollar.
Van Allsburg did not address Chapter 11 filings, which cover business reorganizations.
In the first quarter, overall bankruptcy filings were off 5.3 percent while in the second quarter they plunged 17.2 percent.
Curtis Ching, acting assistant U.S. Trustee of the district of Hawaii, expressed some surprise at the decrease in filings.
"It's surprising a little bit because I think (bankruptcies for) the nation as a whole are going up a little bit," said Ching, whose office's sole responsibility is administration of bankruptcy cases. "Hawaii seems to be going in a different direction. Hopefully, that's a sign the economy is improving in the state."
The third quarter, which generally has a lower number of bankruptcy filings than other quarters due to summer vacations, showed decreases in two of its three months. In July, filings were up 11 percent from a year ago, to 423 from 381, while August filings fell 10.8 percent and September filings dropped 13.8 percent.
Laney said Hawaii has emerged from the recession faster than some economists anticipated because the downturn was relatively mild, mostly confined to tourism and didn't have many ripple effects through the rest of the state's economy.
"We didn't know what to think at this time last year," Laney said. "We didn't know when airlines would start flying again or when tourism markets would come back. It turned out not to be as bad as we thought."
Laney said that although the number of Japanese visitors is still down from a year ago, the mainland market has proven to be resilient and has shown improvement.
Laney also credited the low interest rates for the economic rebound.
"Anything that has to do with interest rates, such as real estate, construction or auto sales, has been very strong and that also has helped the economy over the past year," Laney said.
State of Hawaii
