Research shows that country’s economic growth has slowed to its weakest pace since 2001, the last time the nation experienced a recession. In an article published in the Economic Times, April 2007- 2008 saw a 49% increase in nationwide business bankruptcy filings, by far the year’s biggest gain. Even worse, jobs have been lost for the fourth month in a row, with a total of 260,000 having been cut this year. And all of this occurs even as a federal law makes it harder for people to erase debt!

While the entire nation has been targeted, South Florida has been hit particularly hard. An article published in the Sun-Sentinel found that from January- April, the U.S. Bankruptcy Court’s Southern District of Florida, which represents nine counties, received 5,579 total business and personal bankruptcy petitions. The same period in 2007 saw 3,227 petitions; a whopping 73% year-to-year increase! The court found that there were 73% more business and personal bankruptcies filed in April 2008 compared with a year ago.

In March, 15 Palm Beach County businesses, 25 Broward County businesses, and 32 Miami-Dade County businesses filed for bankruptcy. Andrew Cagnetta, owner of Fort Lauderdale’s Transworld Business Brokers, says that South Florida’s economic crisis is due to the “triple whammy effect: gas prices, banks being uncooperative and the real estate market not fueling sales.”

Now, many companies are permanently closing and filing for bankruptcy protection. This includes those with multiple South Florida locations, such as Linens ‘N Thing and American Home Mortgage. A large number of South Florida-based companies, including two builders, Levitt and Sons and Tousa Inc., have also sought bankruptcy protection. One company’s problems can affect others; a builders’ bankruptcy causes contractors, door/window companies, and flooring businesses to declare bankruptcy, as well. And family-owned businesses aren’t safe, as many suffer when their tenants leave or can’t pay the rent.

It’s unlikely we’ll see much good news in the near term as more bankruptcies and foreclosures are certainly to be expected in a recessionary period. “The biggest question is how long the cycle is going to last,” says Mike Jones, president of Palm Beach County’s Economic Council. “This is really serious. It’s not going to be a short cycle. It’s not a quick recovery,” said Paul Singerman, the bankruptcy lawyer for Levitt and Sons of Fort Lauderdale and co-counsel for Hollywood-based Tousa. He says that for every client filing for bankruptcy, 10 more avoid bankruptcy by doing “workouts”; this includes selling businesses, refinancing debt, or taking on new partners with money.


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