Hawaii’s job losses and business shutdowns from COVID-19 have yet to show up in the Bankruptcy Court filings, but it appears to be only a matter of time before the court gets overwhelmed.
“This could be unparalleled from what I can see right now,” said Honolulu bankruptcy attorney Greg Dunn, adding that his cases are surging. “I thought the last recession was worse, but this could be the mother of all recessions.”
In March bankruptcy filings fell statewide from the year-earlier period for the second time in three months. But the trend is upward, as they have increased each month so far this year. There were 141 filings last month, six fewer than the 147 in March 2018, according to data released Wednesday from the U.S. Bankruptcy Court, District of Hawaii.
Dunn said his phone is ringing off the hook because most of his appointments are done remotely due to social distancing.
“It’s very busy and it’s going to get busier,” Dunn said. “Bankruptcy is usually a lagging indicator (when people file as a last resort). But these are different times that we live in. Things are totally different now. Things are happening so fast with the coronavirus from just a month ago with all these people losing their jobs. It’s not lagging behind. I’ve never seen it like this before.”
Dunn said hearings and meetings of creditors are being conducted by teleconference even with the Bankruptcy Court closed physically. Filings are done online.
“These people who live paycheck to paycheck, once they stop getting a paycheck, they’re going crazy,” Dunn said. “When they couldn’t pay their rent on April 1, what do you you think is happening? Not very good. They have to use their money to buy food.”
In what could be the last down period for a while for bankruptcy cases, Chapter 7 liquidation filings — the most common type of bankruptcy — dipped 3.6% to 106 last month from 110 in the year-earlier period. Chapter 13 filings, which allow individuals with regular sources of income to set up plans to make installment payments to creditors over three to five years, fell 5.6% to 34 from 36. There also was an unusual Chapter 15 filing, which allows foreign debtors to gain access to U.S. bankruptcy. There were no Chapter 11 reorganization filings last month but one in the year-earlier period. Chapter 11 files are typically used for business reorganizations.
Bankruptcies fell in three of the four major counties. Honolulu County filings fell to 100 from 105, Hawaii County filings declined to 10 from 16 and Kauai County filings dipped to seven from nine. Maui County filings rose to 24 from 17.
Bankruptcy filings in March fell from a year ago.
2020 2019 PCT. CHANGE
Chapter 7 106 110 -3.6%
Chapter 11 0 1 —
Chapter 13 34 36 -5.6%
Individuals with regular sources of income set up plans to pay creditors over time
Chapter 15 1 0 —
Allows foreign debtor to gain access to U.S. bankruptcy
Total 141 147 -4.1%
Source: U.S. Bankruptcy Court, District of Hawaii