U.S. Bankruptcy Courts — Judicial Business 2020
Nationwide, debtors in 2020 filed 612,561 bankruptcy petitions, 164,113 fewer than in 2019.
Nonbusiness (i.e., largely consumer) petitions, which accounted for approximately 96 percent of all petitions, dropped 22 percent to 590,170. Business petitions, which amounted to 4 percent of all petitions, decreased 2 percent to 22,391. The reduction in filings has been attributed mainly to the effects of the COVID-19 pandemic.
Petitions for bankruptcy may be filed under one of six chapters of the Bankruptcy Code (chapter 15 is a codification of the Model Law on Cross-Border Insolvency and is intended to provide mechanisms for dealing with insolvency cases with debtors, assets, claimants, and other parties of interest involving more than one country). Most consumer petitions were filed under chapter 7 or under chapter 13. Most business petitions were filed under chapter 7 or under chapter 11.
|Chapter 7||Provides that non-exempt assets be liquidated and proceeds distributed to creditors.|
|Covers local governments and instrumentalities.|
|Allows businesses to reorganize and continue operating. Also available to individuals whose debts exceed statutory limits for filing under chapter 13.|
|Covers family farmers and fishermen.|
|Provides that debtors with regular income retain assets and obtain court-confirmed plans to pay off their creditors.|
|Applies to foreign corporations and individuals.|
Filings under chapter 7 decreased 15 percent to 409,164 and constituted 67 percent of all cases filed. Nonbusiness chapter 7 filings accounted for 97 percent of all chapter 7 cases filed and amounted to 67 percent of all nonbusiness filings. Business chapter 7 petitions went down 4 percent and constituted 57 percent of all business cases filed, compared with 61 percent in 2019.
Cases filed under chapter 13 fell 33 percent to 194,384. These petitions equaled 32 percent of all filings. Nonbusiness chapter 13 petitions also declined 33 percent, dropping to 193,095 and amounting to 33 percent of all nonbusiness petitions. Business chapter 13 petitions decreased 30 percent from 2019 and represented 6 percent of all business cases filed, down from 8 percent in 2019.
Chapter 11 filings increased 12 percent to 8,188. Chapter 11 cases, which typically require significantly more court resources than do cases filed under chapter 7 or chapter 13, accounted for 1 percent of all filings. Business petitions filed under chapter 11 grew 20 percent to 7,537 and amounted to 34 percent of all business cases filed, up from 28 percent in 2019. Nonbusiness chapter 11 petitions, which represented 8 percent of all chapter 11 filings, went down 34 percent.
Filings under chapters 9, 12, and 15 of the Bankruptcy Code collectively accounted for less than 1 percent of all petitions filed.
Bankruptcy filings decreased in all circuits. The Second Circuit had the largest decline over last year as filings there fell 29 percent. The First, Third, and DC Circuits each had reductions of 26 percent. The Sixth Circuit saw the largest numeric decrease, a drop of 25,212 cases (down 22 percent from last year).
The federal Judiciary has 90 bankruptcy courts, one in each judicial district except for the Districts of Guam, the Northern Mariana Islands, and the U.S. Virgin Islands (where bankruptcy cases are heard by a district court judge or a visiting bankruptcy judge), and the Eastern and Western Districts of Arkansas (which share a bankruptcy court). In 2020, 89 of the 90 bankruptcy courts reported fewer filings compared with the previous year, while the District of Delaware reported 6 percent more cases opened than in 2019. The District of the Virgin Islands reported four cases, the same number as in 2019.
The number of bankruptcy cases terminated fell 9 percent to 721,251. As filings outpaced terminations, pending cases dropped 11 percent to 906,738.
For data on activity in the U.S. bankruptcy courts, see Table 6 and Table 7 and the F series of tables.
Adversary proceedings are separate civil lawsuits that arise in bankruptcy cases, including actions to object to or revoke discharges, to obtain injunctions or other equitable relief, and to determine the dischargeability of a debt. Adversary proceedings may be associated with consumer bankruptcy cases, but most arise in cases filed under chapter 11. Because of time limits imposed by Section 546 of the Bankruptcy Code, the number of adversary proceedings filed usually is related to the number of chapter 11 cases filed two years earlier.
In 2020, filings of adversary proceedings declined 9 percent to 21,759. This was 27 percent below the total for 2016. Sixty of the 90 bankruptcy courts reported lower filings, and 34 districts had reductions of 20 percent or more (compared with 27 districts in 2019). The largest numeric decrease was a drop of 651 filings (down 47 percent to 724) in the District of New Jersey.
Filings of adversary proceedings rose in 30 bankruptcy courts, with 15 districts registering gains of 20 percent or more (compared with 22 districts in 2019). The Southern District of New York reported the largest numeric growth, an increase of 1,336 filings (up 169 percent), with most arising from a chapter 11 bankruptcy case filed in 2018 by Sears Holding Corporation.
Terminations of adversary proceedings declined 11 percent to 22,029. Pending adversary proceedings dropped less than 1 percent to 23,909.
Data on adversary proceedings in the bankruptcy courts can be found in Table F-8.