Business Bankruptcies Decline

 

May 25, 2004--Business bankruptcies fell 2% for the year ending March 31, according to the Administrative Office of the U.S. Courts.

Business filings totaled 36,785 in March 2004, down from 37,548 in 2003 and 39,845 in 2002.

"The continued decline in business bankruptcies reflects an improved economic climate for business, aided by sustained low interest rates," said Samuel Gerdano, executive director of the American Bankruptcy Institute.

Conversely, personal bankruptcies rose 2.8% for the same 12-month period, to 1,618,062 in 2004 from 1,573,720 the prior year. The rate, however, has slowed over the last two quarters.

Consumer borrowing ballooned while interest rates have been at historical lows. The Federal Reserve reported that consumer credit increased at a seasonally adjusted annual rate of 3.4% in March over February, pushing total consumer credit outstanding to a record $2.02 trillion.

It is expected that the bankruptcy rate will continue to slow as credit tightens and the economy improves.


Matt Quinn

Matt Quinn contributes to the Wall Street Journal's corporate finance blog. He has also written extensively about banking and corporate finance for publications including Inc., American Banker, and Financial Week. He lives in Brooklyn, New York.