That legislation, which will make it more difficult for individuals to discharge some types of debt and for small businesses to reorganize, is stalled as a conference committee works out differences between the House and Senate versions. The grim prospect of a tougher law, however, was the catalyst for some businesses in financial trouble to file for bankruptcy sooner rather than later. Nor is the wave of insolvency limited to high-tech neighborhoods or to the business community. Many observers are predicting that records set in 1998 will be surpassed this year. The rising tide of insolvency is not expected to turn anytime soon.
Personal bankruptcy is often a direct consequence of small-business bankruptcy, lawyers say.
Right now, half of the matters I'm dealing with have some sort of a solvency angle with them. It's not just the debtors and creditors who want advice, but also people who have contracts with bankrupt corporations. It goes on down the line. For those that came up empty-handed, the typical pattern has been to let employees go and become dormant for a couple of months, Grody says. For every small business going through bankruptcy, many more are quietly liquidating outside of the court system.