In 2009, even as the economy began its slow recovery, businesses continued to struggle. That was the news released this morning by Equifax Inc. According to the credit reporting agency, commercial bankruptcy filings increased by more than 50 percent last year.

Such filings did slow towards the end of 2009, but the brisk pace set in January kept the total number of bankruptcy submissions at 40,000 higher than in 2008. However, many hope that the pace will continue to slow in 2010, offering some margin of relief to the hard hit business sector.

Out of all geographic areas stricken with commercial bankruptcy, the top four were from California and included both San Diego and Los Angeles. Businesses can opt for either Chapter 7 or Chapter 11 bankruptcy, with Chapter 7 functioning in much the same way as it does for individual bankruptcies.

In a Chapter 7 bankruptcy, a trustee is appointed by the court to liquidate all business assets, with earnings going to the business' creditors. During this period, business divisions may be sold off to other companies or disbanded completely.

In a Chapter 11 bankruptcy, business debt is reorganized - much like a Chapter 13 for consumers. In these cases, the business owner (debtor) will usually retain control of his or her business, albeit under the oversight of the court.

In a recent case, South Bay Expressway Ltd. filed for bankruptcy in San Diego after their toll road, the South Bay Expressway, failed to take off as expected. With profit nowhere near projections, the company filed for Chapter 11 in late March. Business executives plan to continue to run the toll road throughout the bankruptcy proceedings and subsequent restructuring.

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