Hawai'i bankruptcies at lowest level in seven years
By Sean Hao
Advertiser Staff Writer
Business and personal bankruptcy filings last year in Hawai'i fell to their lowest level in seven years as the economy continued to rebound from the after-effects of the Sept. 11 attacks.
Total bankruptcy filings last year dropped to 3,781 or by nearly 16 percent from 4,476 in 2002, according to figures released yesterday by the U.S. Bankruptcy Court's Honolulu office. The number is the lowest level since 1996 when bankruptcy filings in Hawai'i numbered just 3,092.
The small number of filings isn't surprising, said Leroy Laney, an economics professor at Hawai'i Pacific University and First Hawaiian Bank consultant. Bankruptcy filing figures are a lagging indicator and last year Hawai'i experienced relatively low unemployment and decent job growth despite lackluster visitor arrival numbers.
Low interest rates and increasing home values also are likely factors behind the drop in bankruptcies. Last year's decline in bankruptcies follows an 11 percent dip in 2002.
"The economy has been growing for several years now since 9/11," Laney said. "Going forward I would expect that they (bankruptcies) could decline even further in 2004 knowing what's coming down the pipe."
Much of the strength underlying the economy comes from growth in the housing and real-estate sectors. With projects to renovate thousands of military homes expected to start this year, the outlook for the construction industry remains upbeat.
During 2003 the number of Chapter 11 reorganization bankruptcies increased to 29, but remained within historical norms. Among the notable businesses that filed for bankruptcy last year were Hawaiian Airlines, Palama Meat, technology company HotU and airplane refueler Century Aviation.
Chapter 7 asset liquidations, which typically involve personal bankruptcies, accounted for about 87 percent of all Hawai'i bankruptcies.
The drop in Hawai'i bankruptcies bucks a national trend. There were 1.66 million bankruptcies countrywide in the 12 months ended in September — up 7.4 percent from the prior 12-month period, according to the American Bankruptcy Institute. The number was the highest annual total ever.
One factor that may have driven filings higher in 2001 was the anticipation that Congress would make it harder for individuals to declare bankruptcy.
But Congress is only now considering a bill that would tighten bankruptcy rules. The measure would force more people filing Chapter 7, which eliminates most debts, to file Chapter 13 that allows a filer with regular income to repay creditors.
Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.
