Hawaii’s slow-growth economy saw a 27.1% jump in February bankruptcy filings in what could portend continued increases through 2020 if the coronavirus affects the state’s tourism industry.
The 136 cases last month were the most for any February since 149 were filed in 2014, according to data released Monday from the U.S. Bankruptcy Court, District of Hawaii. There were 107 filings in February 2019.
State Chief Economist Eugene Tian said it’s too soon in the year to blame last month’s bankruptcy filings on the coronavirus because the number of cases in the country is still mild.
“We’re still seeing an increase in visitors, but later in the year we’ll lose visitors because of the virus, especially from China, Korea and Japan,” he said. “In future months the retail and food service industries may be impacted because those industries are small.”
Honolulu bankruptcy attorney Blake Goodman expects the number of cases to rise in 2020 for the third year in a row.
“The last two years it’s been a 10 or 11% increase, and I predict this year there’s going to be an accelerated increase of filings — maybe a 15 to 17% increase,” he said. “The coronavirus is just a trigger, but the overdue economic slump and recessionary forces are certainly going to take hold in the mainland economy. The mainland gets a cough and Hawaii gets pneumonia.”
Chapter 7 liquidation filings — the most common type of bankruptcy cases — rose 18.9% to 88 last month from 74 in the year-earlier period. Chapter 13 filings, which allow individuals with regular sources of income to set up plans to make installment payments to creditors over three to five years, jumped 50% to 48 from 32. There were no Chapter 11 reorganization filings last month compared with one in the year-earlier period.
Bankruptcies were mixed in the four major counties. Honolulu County filings jumped to 99 from 83, Hawaii County filings soared to 22 from four, Maui County filings fell to 12 from 15 and Kauai County filings dipped to three from five.
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Bankruptcy filings in February rose from a year ago.
2020 2019 PCT. CHANGE
Chapter 7 88 74 18.9%
Liquidation
Chapter 11 0 1 —
Business reorganization
Chapter 13 48 32 50%
Individuals with regular sources of income set up plans to pay creditors over time
Total 136 107 27.1%
Source: U.S. Bankruptcy Court, District of Hawaii
