There is little doubt that most people and businesses are glad to see 2009 pass, but what does 2010 hold in store mainly when it comes to bankruptcy filings?
The 2009 calendar year saw the bankruptcy filings of companies that were once thought impermeable to such a development. We can expect to see more pre-packaged bankruptcy filings this year by large businesses. This type of bankruptcy has always been around, but it was turned into an art form in 2009. The basic idea is to put the screws to the creditors while threatening a bankruptcy filing. Those creditors that don’t agree to the deal being offered are then washed away in bankruptcy while those that agree come out the other side with some interest still in the company, often an equity interest. The second trend we will see in 2010 is the continuation of huge bankruptcy filings. The difference is you and I will not recognize many of the names. These companies will be behind the seen entities. The number on industry where this will occur is in commercial real estate. Everyone from mall owners to brokers to, well, anyone associated with the industry is going to be in big pain. 2009 started the commercial real estate market implosion, but 2010 will see the biggest bloodletting.
The third development will be the constantly “hidden” second great depression. People say we were saved from a great depression, but this isn’t true. The key is the banks. More banks failed in 2009 than 2007 and 2008 combined. The government is just doing a good job of keeping the news under wrap. Unemployment is another reason for filing bankruptcy well; the reported rate is just over 10 percent. In truth, it is closer to 20 percent. The official rate does not include people who are working part time or haven’t had a job in a year. All of this will lead to more personal and business bankruptcy filing.
Economic hope in 2010, the good news is we’ve become stabled from a confidence stand point. That is important because it means people will go out and spend at least a bit on things. Regardless, the panic of 2009 has ended and one can expect a bit of stability in 2010. Will there be a recovery? Technically, we are already in one, but the effects won’t be felt by people like you and I until the end of 2010 or early 2011. Still, that is better than where we were in January 2009.