Metro Atlanta bankruptcy filings decline

By Péralte C. Paul

The Atlanta Journal-Constitution

Commercial bankruptcy filings in metro Atlanta fell in the fourth quarter, a trend that appears to be ahead of the national average but is not necessarily a sign of economic recovery.

Metro Atlanta filings dropped from 401 over the final three months of 2008 compared with 358 in last year’s fourth quarter, according to Atlanta-based Equifax, a credit data company that examines ratings nationwide. Nationally, filings have slowed, but they remain at all-time highs. For all of 2009, commercial bankruptcy filings rose more than 51 percent from 77,638 in 2008 to 117,659.

Atlanta slid to 19th from 15th among metro areas in commercial bankruptcy filings. California had the most metro areas in the top 15: seven, including Los Angeles, Riverside/San Bernardino and Sacramento.

Atlanta’s showing doesn’t mean the region’s economy has fully turned the corner, said Reza Barazesh, Equifax head of North American commercial research.

Though business bankruptcy petitions have fallen in Atlanta, charge-off rates, delinquencies and credit utilization, are either rising or remain constant.

Housing construction, which was a key driver of Atlanta’s economic activity, remains a problem, Barazesh said.

The decrease in filings doesn’t necessarily mean fewer companies are going out of business, said Jack F. Williams, a Georgia State University law professor and bankruptcy expert. Some simply shut down.

“It takes money to file for bankruptcy protection,” Williams said. With no money or assets, “you ditch the keys and walk away.”

Meanwhile, consumer spending affects how much businesses spend and invest back into operations, Barazesh said.

“The [consumer] demand is not there,” he said. “Right now, the only demand is government demand, but private demand is not there so everybody is waiting.”