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Tampa Area Business Bankruptcies Increase 97%

Tribune file photo

The Shells Seafood Restaurant in Brandon prepares to open on Sept. 3. The chain filed for Chapter 11 bankruptcy that month and subsequently filed for Chapter 7 liquidation.

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By MICHAEL SASSO | The Tampa Tribune

Published: November 28, 2008

TAMPA - Shells Seafood Restaurants was losing money for years, but the chain's chief executive sounded upbeat when the company filed for Chapter 11 bankruptcy protection in early September.

Shells hoped to find new funding, shut some weak locations and emerge a stronger company, Chief Executive Officer Marc Bernstein said.

Three weeks later, Shells quietly ended its 23-year run by changing its filing to Chapter 7, or liquidation. The company found no one willing to lend money so it could stay in business.

The same story is playing out across the Tampa Bay area. Tribune research shows business bankruptcy here is rising much faster than in most regions of the country.

All told, 500 businesses filed for bankruptcy in four Bay area counties during the 12 months that ended in June — 97 percent more than the year before.

Tampa bankruptcy lawyer Alberto Gomez Jr. has seen the change in his caseload.

"It's huge," Gomez said. "But there's only so much I can do. I'm cherry-picking the best cases."

Behind the staggering numbers are the housing collapse, fuel prices, a sharp cutback in consumer spending and, for businesses such as Shells, trouble getting financing.

For its calculations, the Tribune focused on counties nationwide with more than 10 business bankruptcies filed in federal court. That added up to 337 counties.

The rush of filings in the Bay area started with real estate investors and developers whose projects took a dive as the housing market collapsed, said Tampa bankruptcy lawyers Herbert Donica, who has his own firm, and Mark Wolfson of the Foley & Lardner firm.

Next came the builders, followed by the small subcontractors and tradesmen. Finally, the wave has come to envelop retailers that sell big-ticket items, such as cars, and businesses that depend on people's discretionary income, especially restaurants.

Last week, Tampa's Ernie Haire Ford, more than a half-century in business, filed for bankruptcy, joining auto dealers including Bob Wilson Dodge of Tampa and Bill Heard Chevrolet in Plant City.

Among restaurants, Shells is in good company: Northlake Foods of Brandon, which operates 146 Waffle Houses in the South, and Sam Seltzer's Steakhouse are among businesses that have filed Chapter 11 bankruptcy, in which a company tries to reorganize and continue operating.

Many analysts are expecting a flood of retailers to file for bankruptcy protection after Christmas, and stores are hoping for a turnaround during the crucial holiday buying season.

Not captured in the bankruptcy statistics is an unknown number of troubled businesses that are filing what's known as "assignment for the benefit of creditors," a process similar to bankruptcy but conducted in state court, said Gomez, the Tampa bankruptcy lawyer.

Donica said the bankruptcies he's seeing now differ from years past. Before, someone would file for protection only after racking up big credit card debt, say, $80,000. Today, individuals and small business people are filing with far less debt because they lost their jobs, see few prospects and hold little hope of getting their heads above water.

The rapid deterioration of home equity, which many people tapped for their small businesses, is also to blame for the rise in business bankruptcies, Donica said.

"I'm seeing people with less debt overall, but less ability to pay it," Donica said. "It doesn't take much to push these people over the edge."

Reporter Michael Sasso can be reached at (813) 259-7865.

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