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Bankruptcy Boom: The number of large corporations that have sought Bankruptcy Court protection this year is up 57% over 1997, according to a study released Tuesday.
Twenty-two public companies with assets of more than $200 million have filed for Chapter 11 protection this year, the largest number since 1993, said Lynn Lopucki, a Cornell University law professor who specializes in bankruptcy law. The filings include such former highfliers as Boston Chicken Inc. and FPA Medical Management Inc.
“If you look at companies’ ratios of debt to revenue, you’ll see it’s up significantly from several years ago,” said Lopucki, who oversees the Bankruptcy Research Database at Ithaca, N.Y.-based Cornell.
Business bankruptcy filings tend to increase during good economic times because of rapid expansions, and to drop off during recessions, said Charles Tatelbaum, a Florida lawyer who specializes in bankruptcy cases.
“The farther you are out on the limb, the less wind it takes to blow you off,” he said.
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