Bankruptcy Duration- Results for 3rd Qtr. 2017

How long does a bankruptcy take? Even a cursory review of bankruptcy filings will show you that the duration for each bankruptcy case is unique.  Each has its own unique set of facts, circumstances, creditors, debtors, and strategies that makes predictions about the timing of events difficult.  Federal rules mandating specific timelines for some events helps give creditors more rights as a case ages but these rules do not by themselves guarantee a specific duration.

To answer this question about bankruptcy duration, we decided to take hard look at activity in the third quarter of 2017 to what if anything could be learned about the duration of bankruptcy cases.  We also compared these results to the prior quarter to see if any trends were apparent.  We also decided to focus only on the duration of chapter 11 bankruptcies (if anyone wants to know about other chapters, contact us.)

Putting this information together is not easy.  There are several companies that will inform you of the names and dates for companies that have filed bankruptcy, but trying to figure out when something happens in a case (like the confirmation of a bankruptcy plan) is a harder problem.  (Lucky for us, our sister service TrollerBk.com excels at searching for docket events.)

Bankruptcy Plan Confirmed- Duration in the Third Quarter

Based on the number of plans that were confirmed in the third quarter of 2017, we found that the median duration of a chapter 11 bankruptcy case (that is from the filing date to the date a plan is confirmed) was 352 days.  (This is the median result which means that half of the cases took more time that 352 days and half the cases took less than 352 days.)
The third quarter result is up 69 days over the median in the second quarter of 283 days. The fastest plan confirmation was only 36 days for Crossroads Systems, Inc. in the Western District of Texas; the longest time for plan confirmation was 956 days for NW Valley Holdings, Inc. in Nevada.

The total number of plan confirmations was down in the third quarter compared to the second quarter. The Central District of California was the busiest court confirming 27 plans followed by the Eastern District of North Carolina with 18 plans confirmed. Meanwhile Delaware, the Middle District of Florida and the Eastern District of North Carolina tied as the most active for corporate bankruptcy confirmation, each with 11 plan confirmations. Average Duration varied in the courts from 177 to 840 days with a median average of 362 days.

The data is based on plans confirmations that occurred in the third quarter. It does not consider cases that are older that have not yet had a plan confirmed. We also chose to look at the median rather than the average because there are cases that took significantly longer than the median which skewed the average such that it was higher than the majority of the cases in the dataset.

Bankruptcy Resolution other than by Plan- Average Duration

Not all chapter 11 bankruptcies are resolved through the confirmation of a plan. Other alternatives include being converted to another chapter (typically a chapter 7 which implies a liquidation) or dismissal. In the third quarter, we found that the median duration for a chapter 11 case that was concluded for some reason other than a plan confirmation was 283 days. This is up 6 days from the second quarter.  The number of days ranged from a high of 4,382 for R.E. Service Co., Inc. in the Eastern District of California to a low of 1 days for Eternal Prosperity that was dimissed the next day in Maryland. 

These average were based on activity recorded during the subject period. What is not included in the average are filed cases where no resolution has been reached.

Leave a Reply

Your email address will not be published. Required fields are marked *