The Business of Bankruptcy

By Chris Roush
July 8, 2008

Workers getting laid off. Homes being repossessed. Consumers struggling to pay higher gas and food prices.

These are the headlines that dominate business sections of late. And it all adds up to one thing: Business journalists should be spending more time in their local bankruptcy court.

And yet a cursory and definitely unscientific survey of business news desks shows that few have someone specifically devoted to checking the U.S. bankruptcy court on a daily basis.

Some say they leave it to the news desk’s courts reporter to let them know of anything that seems interesting. Others say that the closest bankruptcy court is too far away from their newsroom – and even outside their city – to make it worthwhile for daily coverage.

But I beg to differ.

It’s worth the effort for a business reporter – or two – to get to know the bankruptcy court system. In the three months that ended March 31, bankruptcy filings were up 27 percent. The American Bankruptcy Institute projects more than 1 million filings for the year, a number unsurpassed since Congress tightened the bankruptcy laws in 2005.

Bankruptcy court is where the human suffering that results from an economic downturn is laid bare for all to see. It’s where a couple that got stuck in a mortgage they can’t afford is now trying to piece their lives back together. It’s where a mother of four on food stamps explains to a judge why she can’t pay her rent any more because food on the table comes first

Unless an individual or a company is well known in a community, however, writing a bankruptcy court story isn’t as easy as walking into the court, picking up a filing and heading back to the newsroom. It takes an understanding of how the system works, and knowing important steps along the way, to make bankruptcy court stories come alive for readers.

Here are my tips for covering bankruptcy:

1. Look for the human stories. This may involve sitting in a bankruptcy courtroom for a couple of days while a judge hears cases, but look for families or individuals. Approach them and their attorneys and see if they would be willing to tell their story.
2. Know the filings. The most important is the initial filing, which lists debts and assets, and the list of creditors, a source list for any business reporter. Also look for the reorganization plan, particularly with companies, on how they plan to pay off some of their debt. These documents fill in the facts in your story after you have reported the emotions.
3. Get friendly with clerks and judges’ assistants. They can tell you when important cases – or cases that you’re interested in – will have hearings. Few U.S. bankruptcy courts have developed Web sites with this info, so it takes phone calls and being at the court.
4. Always check the clerk’s office on Friday right before closing.  That’s when high-profile cases often get filed, hoping to escape public notice.
5. Don’t forget about corporate bankruptcies. They often involve layoffs. Anticipate the reorganization plans being filed where employee cuts will be detailed.

Copyright © 2008 Donald W. Reynolds National Center for Business Journalism