Commercial Bankruptcies are Increasing Around the Country
What does that mean for property owners and businesses in South Carolina?
According to the American Bankruptcy Institute, filings under Chapter 11 of the Bankruptcy Code are up twenty-six percent (26%) in the first six months of 2020 compared to the same six months in 2019. Venerable brands such as Brooks Brothers, J.C. Penney, J. Crew, Neiman Marcus, Sur La Table, and others have all sought bankruptcy protection in 2020. In this wave of bankruptcy filings, the retail and restaurant industries seem to be the hardest hit, followed closely by the hotel and tourism, medical and hospital, and oil and gas industries. What does that mean for us in South Carolina?
Just prior to the COVID-19 pandemic, Congress passed a new small business bankruptcy subchapter to make Chapter 11—restructuring bankruptcies—more feasible for small businesses. Yet, since the start of the pandemic, there have been only six (6) Chapter 11 filings in South Carolina. So, where are all these Chapter 11 filings—small business and otherwise—going?
The Bankruptcy Code provides for very flexible venue statutes. These statutes allow companies to file bankruptcy not only where they are located, but also where they are incorporated. As a result, most commercial bankruptcies have historically been filed in Delaware or the Southern District of New York—based in New York City. Recently, because of the impact of the pandemic in New York and the overwhelming number of recent bankruptcies filed in Delaware, more bankruptcy filings have occurred in Chicago and Texas, specifically Dallas and Houston. Until there is fundamental reform of the venue statutes, this forum selection by companies will continue.
Though major brands are filing bankruptcy outside of South Carolina, South Carolina businesses are still impacted by these bankruptcies. South Carolina based landlords, vendors, manufacturers, and other businesses are impacted when a tenant or client files bankruptcy in another state. These businesses may be at a loss as to how best to protect their claims against the debtor.
How can you protect yourself if you are a landlord or business in South Carolina and have a tenant or client file bankruptcy in another jurisdiction? Our bankruptcy lawyers at Robinson Gray have been assisting clients for years in bankruptcies in South Carolina and around the country. We can monitor bankruptcies in all United States Bankruptcy Courts and, through our affiliation with a global network of law firms—Meritas—, we have relationships with local bankruptcy counsel in almost every jurisdiction. In the last two years alone, we have helped clients in multiple bankruptcy cases in New York, Delaware, and Texas.
We can assist in filing of a proof of claim, representing individual or groups of landlords in bankruptcies, defending preference actions, and pursing acquisition of assets or property from a debtor through the bankruptcy process. If your property or business has been impacted by any of the recent bankruptcy filings, we have both the experience and the network to help.
 A bankruptcy venue reform bill, HR-4421, has been proposed but it is currently in committee.