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Bankruptcies soar to 31
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Posted on Dec 29 2005
Bankruptcy cases filed in federal court this year have soared to an all-time high of 31, records at the U.S. District Court for the NMI show.
The 2005 bankruptcy petitions of 31 “erased” the previous record of 25 cases that were registered in 2001 and again in 2002.
This year the petitioners were all individuals who filed Chapter 7 bankruptcy cases, based on a check by the Saipan Tribune of court records yesterday.
Among the petitioners was a former official of the administration of then Gov. Froilan Tenorio.
Under Bankruptcy Chapter 7, most assets of the debtor are liquidated as quickly as possible to pay off his creditors to the extent possible and to free the debtor to start anew.
The bulk of the filings happened on Oct. 13 and 14 when 11 individuals filed bankruptcy petitions.
Many filed bankruptcy petitions on those days because of the effectivity of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, a law that increases the filing fee and makes the petition stricter, among other things, the Saipan Tribune learned.
In 2004, there were 22 cases, which was four more compared with the previous year.
Of the 22 cases last year, there was only one company: Sy’s Corp, the owner of the Pacific Gardenia Hotel.
In 2002, the bad economy reportedly contributed to the filing of 25 bankruptcy petitions. The numbers tied with the all-time high 25 first registered in 2001.
More individuals and businesses filed bankruptcy petitions in 2001, reportedly due mainly to the bad economy made worse by the Sept. 11 terrorist attacks in the U.S. mainland.
Bankruptcy cases began to go up in 1998 after the CNMI became affected by the economic crisis that struck Asia. From 18 in 1998, the record rose to 23 in 2000.
The Bankruptcy Act is a federal law for the benefit and relief of creditors and debtors in cases in which the latter are unable or unwilling to pay their financial obligations.
