While bankruptcies in March rose 18% from a year earlier, April filings did not see a surge due to the COVID-19 pandemic.
A Florida-based attorney who specializes in foreclosures and bankrupticies said businesses that may be in trouble are currently taking a wait and see approach.
The Associated Press reported that business bankruptcies jumped in March. However, in April there was a drop in commercial bankruptcy filings year over year, according to MarketWatch. Commercial bankruptcy filings in April numbered 2,278 which was a 35% drop from a year ago.
Roy Oppenheim, of Fort Lauderdale-based Oppenheim Law, said he is not seeing an increase in bankruptcy filings but has fielded calls from clients inquiring about the process. He described the current climate as "it's a lot like a deer in headlights right now."
"People aren't filing right now and they are scratching their heads figuring out what to do," Oppenheim said.
Oppenheim said that unlike the last foreclosure crisis, this is not just an economic crisis but a public health crisis. He said unemployment will certainly rise even higher than the current 14.7 percent rate. While banks received bailouts during the last crisis, the administration this time "acted quickly and instead of giving bailouts to banks, businesses received them."
He said many clients are waiting to see if they receive relief funds from the U.S. Small Business Adminstration’s Paycheck Protection Program or the Economic Industry Disaster Loan program.
Oppenheim believes “there will be a purge” and foreclosures will occur at the retail and residential level, but he doesn’t see that happening for a year and certainly not before the election.
“There won’t be major foreclosures or dispositions before the election,” said Oppenheim.
He said there will be a major deflationary cycle where the cost of everything will go down. Rents, for the mom and pop businesses, may also have to be renegotiated lower. For example, if a restaurant could only reopen with 50 percent occupancy, the previous rent the business was paying must be lowered to reflect the new business model.
"Bankruptcy is typically done when you have a gun to your head,” said Oppenheim and he indicated that has not been the case as of yet. Instead, clients "are waiting to see what happens."
Oppenheim said he doesn't see a surge in filings occurring "as long as everyone is holding back and overzealous landlords are not seeking rent from tenants when they have no income."
Unfortunately, some "landlords are facing pressure from their mortgage lenders to pay their mortgages, even when no rental income is being received from their own tenants," said Oppeheim, who added, “of course, in turn, the landlord’s mortgage lender will also have to reassess their situation and work with their landlord’s in changing the payment terms.”
Oppenheim helped thousands of homeowners in foreclosure defend themselves against the banks during the Great Recession. He has been hosting a weekly webinar, called Zoom at Noon every Tuesday to help businesses navigate the pandemic and get back to business and anyone could register.
Oppenheim Law
2500 Weston Rd #404
Fort Lauderdale, FL 33331
954-384-6114
https://www.oppenheimlaw.com
Originally posted at: https://flarecord.com/stories/536487751-april-business-bankruptcy-filings-drop-in-april-from-a-year-ago-despite-covid-19
