Md. bankruptcy filings declined 6% last year

March 29, 1994|By Joel Obermayer | Joel Obermayer,Sun Staff Writer

Bankruptcy filings nationwide fell to their lowest levels since 1990 last year, but in another symptom of the lag in Maryland's recovery, the decline in filings here failed to keep pace with most of the country.

Overall, bankruptcy filings in Maryland fell 6.0 percent last year, compared with a 9.9 percent decline in filings nationally, according to figures released yesterday by U.S. courts.

Economists say that the state is still suffering from weakness in defense-related manufacturing and in real estate, and that Maryland was hit particularly hard by the white-collar recession of the early 1990s.

"It's a very small drop from an extraordinarily high level relative to the state's population and number of firms," said Charles McMillion, president of MBG Information Services, a Washington economic consulting firm.

The U.S. District Court for Maryland received 1,575 business bankruptcy filings in 1993, down 4.1 percent from a year earlier, and 14,215 nonbusiness filings, down 6.2 percent from a year earlier. The overall year-over-year improvement in the state ranked 77 among the 94 districts that release statistics.

Nationwide, filings for 1993 fell to 875,202. Business filings fell 11.8 percent, and nonbusiness filings 9.8 percent.

For the three months that ended Dec. 31, filings were down 9.6 percent nationally from a year earlier.

Quarterly statistics for Maryland were not available.

David Walker, an economic analyst at DRI/McGraw-Hill of Lexington, Mass., noted that Maryland is also a laggard among mid-Atlantic neighbors.

"If you look at the rest of the states in the region, Maryland is acting more like a Northeastern state than like Virginia or North Carolina," he said.

In Virginia, bankruptcy filings fell 10.7 percent last year; in North Carolina, 13.1 percent; in Pennsylvania, 13.9 percent.

Mr. McMillion said bankruptcies in Maryland seem to be stuck on a high plateau. "The important thing to note is the very, very sharp rise between 1989 and 1992, when the rise in the bankruptcy rate was one of the strongest in the nation," he said.

Indeed, even though business filings in the state were down in 1993, the total number was more than triple the number of filings in 1989. Nonbusiness filings were almost double their 1989 level.

Mr. Walker, of DRI/McGraw-Hill, said the state can expect to see more business and personal bankruptcies as the state's traditional economic power base continues to weaken.

"The state's Northeast-style manufacturing sector has been pounded, and there's a need for conversion to a more service-based industry."

As part of that conversion, more Maryland companies will be laying off employees and streamlining operations, even though the local economy is on the upswing, he added.

But Mr. Walker said the seeds the state has, particularly among small technology firms, will grow enough long term to create jobs.

"It's getting better. It's just taking awhile," he said.

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