The most significant disparity was in Chapter 11 corporate reorganization filings, used by troubled businesses to fend off creditors while continuing their operations and, typically, seeking new financing. Illinois saw an increase of 98 percent in filings under this chapter, whereas the national increase was only 50 percent. 

Out of more than 55,000 bankruptcy petitions filed in the U. S. Bankruptcy Court in Chicago, the greatest portion was under Chapter 7, a vehicle for individuals and businesses to liquidate their assets, distribute the proceeds to creditors, and erase their liabilities. Slightly more than 4000 of these were filed by individuals and close to 600 petitions were by corporations and other businesses. “There was an increase of over 30 percent in the number of chapter 7 filings,” Allen Iwinski, the public service clerk of the Bankruptcy Court, said.

The chairman of the Chicago Bar Association's bankruptcy committee, Ronald Barliant, said in an interview, “The increase in Chapter 11 filings are a reflection of the economy. This trend is likely to continue at the same rate in 2010 because bankruptcy is a lagging indicator of the economy.”

The Chapter 11 filings indicate that some northern Illinois industry sectors were struggling more than others. The real estate business was hit the hardest, while automotive, construction, transportation and restaurants were other major sectors under considerable pressure.

One expert, however, sees the rise in bankruptcy numbers as a sign of a recovering economy. Lenders are usually hesitant to push companies to bankruptcy courts if the economy is truly suffering.

“Lenders might be too afraid to hold companies responsible if the economy is really bad. But if there are more bankruptcy filings it goes to show that the economy is strong enough for lenders to claim their money,” said Douglas G. Baird, a professor at the University of Chicago Law School, in an interview.

What remains to be determined is if this upward trend will continue in the future. “We haven’t seen much of a slowdown, real estate companies are filing daily and restaurants and logistic companies aren’t doing much better either,” said Ken Troubh, director of research at a bankruptcy data Web site, chapter11filings.com.