AZ bankruptcy filings decline more than 22%

2013-01-13T00:00:00Z 2014-07-02T12:04:51Z AZ bankruptcy filings decline more than 22%David Wichner Arizona Daily Star Arizona Daily Star

Bankruptcy filings in Arizona declined for the second-straight year in 2012, falling more than 22 percent from 2011, according to the latest figures from the U.S. Bankruptcy Court.

Filings in the court's Tucson division fell 19 percent, but the number of Chapter 11 reorganization filings - a type of bankruptcy mainly filed by businesses - rose 14.5 percent, court data show.

Chapter 11 bankruptcy allows a debtor to reorganize under a plan to repay creditors.

While Chapter 11 is usually filed by businesses, more than half of the 95 cases filed in Tucson last year were by individuals.

That was driven largely by people who had debts greater than the limits for Chapter 13 bankruptcy, which allows individuals to restructure their debt, local bankruptcy attorney Eric Slocum Sparks said.

The debt ceilings for Chapter 13 are about $1 million in secured debt - debt backed by collateral - and about $370,000 for unsecured obligations like credit-card debt.

"It's a situation where people have debt that far exceeds the Chapter 13 limits," and often have multiple real-estate properties, Sparks said.

Sparks represented several notable local businesses that filed for Chapter 11 last year, including Nimbus Brewing Co., El Parador restaurant and CDEX Inc., a maker of chemical-detection devices.

El Parador and its operator, John E. Jacob Enterprises, emerged from Chapter 11 in early January after creditors approved a reorganization plan in the consolidated case, Sparks said.

The restaurant, which employs 46 people, has kept operating and is doing well, he said.

CDEX emerged from Chapter 11 in September with a plan that has kept the high-tech company in business, said Sparks.

Nimbus filed for Chapter 11 in April, partly over a dispute with Southwest Gas Corp. The brewing company, which settled with Southwest Gas shortly after filing and has continued operations, recently filed a reorganization plan that is expected to win creditor and court approval in the coming months, Sparks said.

Another Tucson business that filed for Chapter 11 reorganization last year, Metro Car Wash (Arizona Wash Systems), emerged from reorganization after its plan was approved by creditors and confirmed by the court in July, court records show.

2012 bankruptcies by type

A breakdown of bankruptcy filing trends for Arizona's three divisions and statewide

Tucson

Type 2012 cases Pct. annual change

Chapter 7 4,515 -19.3

Chapter 11 95 +14.5

Chapter 13 984 -21.3

Total* 5,595 -19.3

Phoenix

Type 2012 cases Pct. annual change

Chapter 7 17,238 -22.1

Chapter 11 309 -12.2

Chapter 13 2,608 -30.6

Total* 20,156 -23.2

Yuma

Type 2012 cases Pct. annual change

Chapter 7 1,412 -17.3

Chapter 11 18 -14.3

Chapter 13 116 -26.1

Total* 1,547 -18.0

Arizona

Chapter 7 23,165 -21.3

Chapter 11 422 -7.5

Chapter 13 3,708 -28.2

Total* 27,298 -22.2

* Totals include three cases filed under special bankruptcy code chapters: one Chapter 12 (special family farmer or family fisherman filing) case filed in Phoenix, one Chapter 12 filing in Tucson and a Chapter 15 (cross-border) case filed in Yuma.

Source: U.S. Bankruptcy Court

Contact Assistant Business Editor David Wichner at dwichner@azstarnet.com or 573-4181.

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