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January 6, 2012

Business bankruptcy filings drop in 2011

Commercial bankruptcy filings in Maine dropped about 15% last year, a sign of some economic improvement, bankruptcy experts said.

A total of 3,516 commercial entities filed for Chapter 7, 11 or 13 bankruptcy last year, down from 2010’s all-time high of 4,111, according to the Portland Press Herald. Chapter 7 bankruptcies, which require the liquidation of a business’s assets to pay off creditors, were more than 85% of those filed. Richard Olson, a partner at Portland-based law firm Perkins Olson, told the paper that Chapter 7 filings should continue to decline, while Chapter 11 filings, which require debt restructuring, could increase slightly in 2012. That could be a good sign, he said, since Chapter 7 filings usually mean a business is no longer viable. Larry Wold, president of TD Bank in Maine, said the decline is a sign of gradual economic improvement.

The number of filings in 2011 are still higher than 2007 and 2008’s filings of 2,248 and 2,973, respectively. Nationally, bankruptcy filings dropped 20%.

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