More Companies File Repeat Bankruptcies This Year

For the first two months of 2012, more companies have filed for repeat bankruptcy, often referred to as Chapter 22, has spiked this year, according to a story by Reuters.

So far this year, four companies which have filed for a second bankruptcy as opposed to six companies during the entire year of 2011. Those companies include Hostess Brands, makers of the Twinkie, Buffets Inc., who operates family-style buffet restaurant, TBS International, trans-ocean shipper and Fountain Powerboats, according to BankruptcyData.com.

Chapter 22, which is Chapter 11 times two, is common when a company has failed to streamline its operations and eliminate debt. Placing blame is difficult, with lenders, bankruptcy attorneys, investors and the companies all playing a role.

One company, Filene’s, has filed for Chapter 11 bankruptcy three times in the past 12 years.

In an interview with Reuters, Ed Altman, the Max L. Heine Professor of Finance at the Stern School of Business at New York University said, “There is too much emphasis on getting out and getting on with business rather that whether it is going to work.”

Professor Altman said that more repeat bankruptcies can be expected this year as bankruptcy attorneys look to reduce debt and do not focus on the operational issues, which led to insolvency in the first place.

To avoid the troubles of a repeat bankruptcy, a company will benefit from an experienced bankruptcy lawyer, who is concerned with reconciling their financial problems, and helping them avoid future filings.