The number of business bankruptcies in Maryland fell for the third consecutive year in 2012, reaching their lowest level since pre-Great Recession 2007, according to federal bankruptcy court figures.
The trend, mirroring national data, reflects a strengthening economy, experts say.
Some 576 business entities filed for bankruptcy in Maryland courts last year, down 8 percent from 2011. It was the fewest since 2007 when there were 352 filings in the state.
The decline has cut into the business at law firms that handle a significant number of bankruptcies, such as Cohen, Baldinger & Greenfeld of Bethesda.
“Filings are down, so we are seeing fewer bankruptcy cases,” said Steven H. Greenfeld, partner at Cohen, Baldinger & Greenfeld. “That does have an effect on us.”
The firm also provides estate planning and business transaction legal services, so it is not totally reliant on bankruptcies for revenues, he said.
The dropoff in Maryland business bankruptcies was smaller than the national decline.
Nationally, business bankruptcies fell by 22 percent last year from 2011, according to Alexandria, Va., research group American Bankruptcy Institute and data firm Epiq Systems.
An improved economy and businesses being able to strike deals with creditors to borrow more money or delay payments are factors for the decline in commercial bankruptcies, lawyers and others said.
“The economy is a little better. Creditors are willing to work with people more,” Greenfeld said.
Businesses are able to bring debts, assets and cash flow into better alignment and lending has picked up, Amy Crews Cutts, chief economist for credit bureau giant Equifax, said in a report.
“Business owners are better positioned to stay afloat,” Cutts said.
About 2 percent more businesses filed for Chapter 11 reorganizations in Maryland last year than in 2011. But fewer businesses filed for Chapter 7, which shuts down the debtor, with 422 businesses taking the liquidation route last year, down 11 percent from 2011.
Total bankruptcy filings by both individuals and businesses fell by 8.5 percent last year in Maryland to about 23,000, according to court figures. That was smaller than the 14 percent national decline.
The bankruptcy decline should continue this year, “with low interest rates, reduced consumer spending and continued deleveraging by households,” Samuel J. Gerdano, executive director of the bankruptcy institute, said in a statement.
Among the more prominent bankrupcty filings last year was the Chapter 11 reorganization filed in May by RG Steel of Sparrows Point. The company auctioned off steel mills last summer and laid off almost all of the 2,000 workers there.
Executives with Hilco and Environmental Liability Transfer, which bought the mills, recently said they are selling those assets.
Among this year’s bankruptcies is a Chapter 11 reorganization filed this week by Chevy Chase development firm Greentree Associates, which canceled a planned auction of the Bethesda Community Store property on Old Georgetown Road.
Gary Jaffe, managing member of Greentree, said the firm was forced into Chapter 11 because the Harbor Bank of Maryland refused to negotiate the terms and conditions of its loans.
“It’s the bank that’s the problem,” Jaffe said. “It’s not the business there.”
Joseph Haskins Jr., CEO and president of the Harbor Bank in Baltimore, declined to comment.
The Bethesda Community Store, which sells drinks, chips and sandwiches and whose interior room measures only 18 by 30 feet, was established in 1924. It is one of the few remaining commercial structures in Montgomery County dating from the early 20th century.
An earlier store operated on the site in the 1890s. The property is protected by the county’s Historic Preservation Office, and alterations to the exterior of the building or the property must be approved by the county’s Historic Preservation Commission.
Arnie Fainman, who leases the property, said he is unsure how long he can continue to operate. He said he made an offer on the property but it was rejected.
“We were hoping to redevelop the site at some time down the road,” Jaffe said. “We never went forward with it. Arnie was not doing well at the time.”