Bankruptcies

Today, the U.S. Bankruptcy Court for the Southern District of New York granted a petition against Ellen Tracy LLC for a Chapter 7 involuntary petition for bankruptcy. The petition was filed by three creditors seeking nearly $4 million in claims. The creditors were manufacturers of Ellen Tracy products.

The confusing thing, however, is that the entity being forced into bankruptcy, Ellen Tracy LLC, is a former licensee of the Ellen Tracy name which ceased its operations some time ago. It has nothing to do with the brand anymore. Brand Matter LLC, on the other hand, is the entity that owns, manages, markets and licenses the intellectual property of Ellen Tracy.

Guess there's a lesson to be learned here:...

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For 2009 so far, bankruptcy filings are skyrocketing. In August, filings were up 22% year-over-year, and Nevada has become taken the dubious honor of leading the nation in bankruptcies (Tennessee is #2).

More than 950,000 bankruptcy filings have occurred this year, compared to slightly over 700,000 last year. By December, it could come close to 1.5 million.

Consumer bankruptcies have already spiked more than 30% this year, and it looks like the trend shows no signs of flagging. The American Bankruptcy Institute predicts that the tally could hit 1.4 million by the end of the year. So, although there are some experts signaling that the economy is on the upswing, the downstream effects of bankruptcy on consumer spending and corporate balance sheets are going to make it difficult for the market to turn the corner.