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Dan Doyle, a bankruptcy specialist with the Clayton officdof , is handling cleanup work in the Falconm Products bankruptcy here. But he, too, has little work in his own backyard and spends time in New Yorkrepresentingf Solutia's retirees. "We're all busy, but in terms of what we little is going onin St. Doyle said. Doyle and Palanas are among local bankruptcy specialists who have seen thei practices shift to courts in larger primarily the bankruptcy court in New York amid a dramatic drop in bankruptcuy casevolume here. Bankruptcg filings plunged across the country by more than a thirx between 2005and 2006, and the is among the courts pulling down the average.
The caseload at the courrt here fell by morethan two-thirds -- down to 7,443 cases last year, compared with more than 26,000 casesa in 2005, the year a new bankruptcyt reform act took effect. Figuresa for the U.S. Bankruptcy Cour t for Southern Illinois show asimilar drop: from more than 12,800o cases in 2005 to 4,321 last year. Most bankruptcyg attorneys said they now routinely work with debtors and creditorw to solve problems outside ofbankruptcy court. Businesses that have cooperation of thei r secured lenders usually can work outa settlement, and for businesses that don't have that a bankruptcy is probably not going to said Wendi Alper-Pressman, a bankruptcy attorney at in Clayton.
A combinatiom of factors is pushing filings to historicc lows acrossthe country, including large amounts of readilu available private capital that allow businessesw to refinance outside of bankruptcu and tighter rules on filing for bankruptcuy brought on by a federa l bankruptcy reform law that took effect in according to attorneys here and bankruptcy data from arounsd the country. In 2005, the federal bankruptcy court in St. Louiz had 29 Chapter 11 filings. That was down from 40 in 2004. In 2006 the numbert of Chapter 11 filings droppedto 22, and througgh nearly six months of 2007 there have been threer Chapter 11 filings.
One of them alreadu has been dismissed, and the most receng goup to filefor reorganization, The University Club, did so even though the club now exists solelt to wrap up its The bankruptcy court for Southerb Illinois has had four cases so far in seven in 2006 and two in 2005. The sparse number of filings is raising concernsamong U.S. Bankruptcy Court personnel that court budgets will be cut when a new federap budget takes effectin October. Dana clerk of the U.S. Bankruptcy Courtr in St. Louis, said she hopesw those assembling her budget recognize the new bankruptcy law requireas more documentation and more work for her staffcand judges.
"Even though the filings are down, the amoun t of work is not," McWay said. A typicakl liquidation or personal bankruptcy now requires 50 percent more docke t entries than under the previousabankruptcy code. The bankruptcy cour t here has a staffof 56, plus a staf of seven for three judges, and a seniot judge. McWay said her office has an annual budget ofabou $8 million. Wayne Bannert, clerkm of the , said also said the workload has increased for his stafdof 34, which includes one judge, Kenneth Meyers, and four visitinfg judges. He would not discuss the budgety forthe court.
McWay said that bankruptcyh filingsare cyclical, follow economic trends and could increasr if the economy slumps. But some bankruptcy practitionersx questioned whether smaller federal bankruptcy courtsz such as the onein St. Louid will ever see large bankruptcy filings again, because the region is home to fewer national companie s and because private money is available to debtors who are able to restructurde their businesses. "Bankruptcy practices the last four years have focused substantiallg on consensual restructuring andother non-Chapter 11 solutions.
Many observers believwe this shift away from Chapter 11 may well bea long-term said Greg Willard, a bankruptcy practicde leader in Bryan Cave's St. Louis
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