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Small Business Bankruptcies Shrink For Fourth Straight Quarter

Small Business Bankruptcies Shrink For Fourth Straight Quarter

According to a report in August by Equifax, small business bankruptcies are decreasing.  Is this attributable to deleveraging and business debt restructuring? Over the last few years with the economy in turmoil, small business owners have steadily been attempting to bring debt and assets into better alignment. This has helped many companies stay afloat until small business lending and the overall economic picture show signs of improvement. Bankruptcy should be the last option. There are many firms that offer business bankruptcy alternatives which are more time and cost effective.

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Source: Stockhouse.com, August 21 2012, Equifax Inc.

ATLANTA, Aug. 21, 2012 /PRNewswire/ — Small business bankruptcies continued their decline in the second quarter of 2012 shrinking by nearly 17% from the previous quarter, according to Equifax’s Small Business Bankruptcy Report. This is the fourth straight quarterly decline in the number of total U.S. small business bankruptcies since Q2 2011 and the lowest for the second quarter since 2007. The number of business bankruptcies peaked in the second quarter of 2009.

“The shrinking number of small business bankruptcies is not surprising,” said Amy Crews Cutts, Equifax Senior Vice President and Chief Economist. “Small business owners are still steadfastly deleveraging, bringing their debts, assets and cash flows into better alignment; couple that with promising signals in small business lending, and business owners are better positioned to stay afloat.”

With the exception of the New York-White Plains-Wayne, NY-NJ MSA — which saw an 11% spike in small business bankruptcy petitions relative to 2Q 2011 — Equifax data shows nearly all of the 15 MSAs topping the list of those with the greatest number of small business bankruptcies in the second quarter of 2012 remained largely unchanged since Q2 2011; all were among the top ranking a year ago. However, all other top ranking MSAs, including several California markets, experienced declines in excess of 20 percent over the past year.

About the Study

Equifax analyzed Chapter 7, 11 and 13 filings, as part of its comparative study on small business bankruptcy petitions quarter over quarter. Equifax classifies a small business as a commercial entity of fewer than 100 employees.

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Click for more information on Business Bankruptcty Alternatives or to learn about Business Reorganization and Financial Restructuring within Bankruptcy.