From Dayton Business Journal…
Businesses slow pace of bankruptcy filings
by Brittany Hart
Date: Monday, December 13, 2010
Business bankruptcies are on the decline — another signal that the Dayton economy may be looking up.
Many Dayton-area businesses are reportedly headed for recovery as corporate and small bankruptcy filings continue to slow.
For the third quarter, total bankruptcies filed in the Dayton office of the U.S. Bankruptcy Court for the Southern District of Ohio were 2,110, a decline of 2.3 percent from the same period in 2009. The fourth quarter started off with a 5 percent decline in total filings for October, with 715 in the Dayton office compared with 754 for October of 2009. And there were no Chapter 11 filings in the Dayton office for September or October. The only other previous month in the past two years to have zero Chapter 11 filings was June 2009.
There were 7,200 bankruptcies filed as of October in the Dayton office. For all of 2009 there were 8,300 area bankruptcies filed.
On the national level, U.S. small business bankruptcy filings fell more than 11 percent in this year’s third quarter, Equifax Inc. (NYSE: EFX) reported in October. The Atlanta-based credit reporting company noted small business bankruptcies were down about 19 percent from their peak in the second quarter of 2009 and dropped for the fifth quarter in a row. There were 30,000 small business bankruptcies in the third quarter, compared with about 34,000 in the third quarter of 2009.
Meanwhile, the south central region of Ohio is leveling out as Southern District of Ohio, which consists of Dayton, Cincinnati and Columbus, reported 28,000 bankruptcy filings as of October — about the same amount as that time span in 2009.
The region’s positive economic trend began this fall when companies reported an estimated 1,400 current local job openings and 1,900 more positions set to be available in 2011, according to Dayton Business Journal research.
The bankruptcy practice group at Thompson Hine, Dayton’s largest law firm, saw a steady, but not significant, volume of bankruptcy cases the past year.
Jennifer Maffett, associate lawyer in Thompson Hine’s bankruptcy practice, said there has been a steady flow of bankruptcy filings from its clients in Ohio and around the nation during the past year, and the firm expects to see the same level of activity for 2011.
Although corporate bankruptcies are flattening, many notable companies with local ties filed for bankruptcy this year.
While many businesses turn to bankruptcy to wipe out debt, protect assets and reorganize, there are pros and cons to filing. For example, General Motors (NYSE: GM) filed for bankruptcy in 2009 and despite potentially harming its reputation, it has emerged a leaner and profitable company. However, not all bankruptcies lead to success stories. Movie Gallery Inc., the operator of the Hollywood Video rental chain, closed 805 poorly performing U.S. stores this year after falling sales and mounting debt led to its second bankruptcy in three years.
Dayton companies and businesses with Dayton-area locations that filed for bankruptcy this year include:
• Berry Co., based in Moraine;
• Blockbuster Inc., based in Dallas;
• Brown Publishing Co., based in Dayton;
• Max and Erma’s Restaurants Inc. (Nasdaq: MAXE), based in Columbus;
• Movie Gallery Inc., Dothan, Ala.;
• WorkflowOne Inc., based in Dayton;
• Uno Chicago Grill, based in Boston;
Moraine-based Berry Co. and its parent company, Colorado-based Local Insight Media Holdings Inc., declared bankruptcy in November.
The marketing, publishing and sales firm, which has about 300 Dayton-area employees, has continued to operate as usual throughout the reorganization process after securing commitments for a $25 million debtor in possession financing facility from JPMorgan Chase (NYSE: JPM) and GSO Capital Partners LP.
In November, Scott Pomeroy, president and chief executive officer of Local Insight Media, said the company was restructuring and shifting its focus from print advertising, publishing and sales of Yellow Pages to online marketing, sales and advertising. Company officials could not be reached for further comment.
Some businesses bounced back from bankruptcy this year, including Miamisburg-based Dayton Superior and Troy-based Delphi Automotive LP.
After filing for bankruptcy in late 2009, concrete construction products manufacturer Dayton Superior emerged with a reorganization plan six months later and went on to make two major acquisitions this year. In September, the company purchased the assets of Bellwood, Ill.-based Universal Building Products Inc., and acquired Kansas City, Mo.-based Unitex Chemicals, a developer and manufacturer of chemical-based solutions for concrete construction and repair.
Delphi, which went into bankruptcy in 2005 and slowly re-emerged in 2009, bounced back in November with potential for significant expansion.
The plant, which has hundreds of Dayton-area employees and thousands of retirees as one of GM’s largest suppliers, is looking to invest more than $7.1 million in new machinery and may add up to 100 workers at its Northwoods Boulevard plant in Vandalia.
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