Austin Bankruptcy Blog


The Effect on Chapter 11 Business Bankruptcies in 2020

Posted by Sean T. Flynn | Dec 01, 2020 | 0 Comments

Bankruptcy is one of the most challenging options that one can only choose if the situation does not allow any other possible way. While there can be various kinds of bankruptcies, when we talk about this year, the first thing that comes to mind is business bankruptcies in 2020. The reason why your mind will take you directly towards this is not just because of the obvious calculations of businesses facing a downfall due to COVID-19, but also because we now have statistics that confirm this case. Hence, before moving forward with everything you need to know about recent corporate bankruptcies, let's take a look at some figures first to legitimize the significance of this topic.


The best way of analyzing data in this situation is to compare it with the data for last year. Although we are not yet done with this pandemic and the year itself, one can still compare and contrast the statistics present for half of the year which were recently released. While the overall bankruptcies for all chapters went down by 23% for the first 6 months from last year, there was an increase of 26% in chapter 11 bankruptcies from 2019 for the first half and a stark increase of 43% was noted for June 2020 in comparison to June 2019! These figures are good enough to show how businesses have been opting for seeking help by filing bankruptcy amidst the pandemic even after knowing that there can be severe consequences.

Chapter 11 Business Bankruptcy

We are now well aware of how there has been an increase in business bankruptcies in 2020 for the first half only and the number will probably go even more up for the rest of the year. However, it is also essential to understand what exactly chapter 11 means and what effect does it might have had after the recent changes. Chapter 11 bankruptcy is a reorganization process through which you can change your payment plan by proposing a new one that allows you to keep your business running while also being able to pay back to your creditor. The case is different for every business, but it is surely not like chapter 7 where you directly just give in and all your assets are taken to pay the debt amount. In February 2020, an amendment came into effect which was basically for small businesses. This change was made in subchapter V of chapter 11 through which the process of bankruptcy was made faster and at a low-cost for small businesses. While this change was not specifically made because of the current pandemic, it did help a lot of people who because of coronavirus are now unable to pay their debt according to the payment plan that they were okay with at the start. As a piece of advice, we would suggest that if you have a business which had to face a major setback due to the current situation, you should consult an expert before taking any big step and then do what might be the best option for now! For more information, speak with an experienced bankruptcy attorney – schedule your free 1-hour consultation today:

About the Author

Sean T. Flynn

Biography A graduate of the University of North Texas, Sean went on to get his JD from the University of St. Mary's School of Law. He is licensed to practice law in the State of Texas, as well as being admitted to the U.S. Federal Court in the Northern, Eastern and Western District of Texas. Sea...


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