Wilmington businesses experienced a bankruptcy boom in 2020, and they could once again
WILMINGTON – Although COVID-19 has caused widespread financial hardship for many businesses across the country and the world, it has conversely led to a deposit boom for Wilmington’s many law firms.
As the center of most American businesses, the city’s legal scene has long depended on a tripod of business services, bankruptcy, and intellectual property. Wilmington State Chancellery court and federal Bankruptcy court and the district court generally ranks among the busiest courthouses in the country, as high-profile business cases are heard.
However, few people probably expected the bankruptcy explosion that occurred last year.
Delaware Chapter 11 court business cases, or companies looking to restructure debt rather than sell assets, have grown from 613 in 2019 to 1,666 last year, by far the most of any court federal bankruptcies. It has also seen its share of so-called “mega cases,” or those involving at least $ 100 million or 1,000 creditors, hit a record 98 last year.
These dramatic increases in the number of cases also led to the highest weighted caseload for court judges at 2,912 last year – the national average was 618. To help shoulder that burden, two new judges Federal bankruptcy officials – J. Kate Stickles and Craig Goldblatt – were added to the bench in April, filling vacancies left in recent years.
Filings slowed in the first half of 2021, with 381 business chapters 11 filed in Delaware, but it still ranks second in the country behind the rapidly growing South District Texas court.
Warren Martin Jr., co-chair of the bankruptcy and financial restructuring practice of Porzio, Bromberg & Newman which opened an office in Wilmington last summer amid the increase in the number of cases, said he believed Another flurry of cases could arise in a somewhat counterintuitive fashion as the economy recovers.
“You don’t want to file for bankruptcy when you slide into the abyss because to get out of bankruptcy you want to have a plan to pay your creditors. If things get worse, now is not the right time to try to convince the court and the creditors, ”he said, noting that the pandemic had likely covered many risky companies last year to restructure their businesses. debt.
Martin said his company is currently seeing bankruptcy cases filed for healthcare entities, mining and metallurgical companies, and traditional retailers, among other industries. Porzio plans to hire more lawyers in Wilmington to help with a growing workload, he added.