17,900 bankruptcies expected
The number of company bankruptcies increases by more than 22 percent
December 1, 2023, 1:16 p.m
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Government support during the pandemic is keeping companies afloat. Experts speculate that many bankruptcies are simply postponed. That now seems to be true. According to an information service provider, the number of bankruptcies will increase sharply in 2023. But it doesn’t look bleak.
The numerous crises are causing problems for companies in Germany. The information service provider Crif expects a significant increase in company bankruptcies this year and next, but does not expect a wave of bankruptcies.
“Companies continue to face significant challenges, including high energy costs, supply chain problems, geopolitical uncertainties and persistent inflation,” explained Germany Managing Director Frank Schlein. In addition, increased production costs, higher personnel expenses and high interest rates affected the financial situation of many companies.
The information service provider expects 17,900 company bankruptcies this year. That would be 22.8 percent more than in the previous year. “Despite the increase, we cannot speak of a wave of insolvencies,” said Schlein. After extensive support programs worth billions, it is more about a return to normality. In order to avert a wave of bankruptcies as a result of the pandemic, the state also temporarily allowed exceptions to insolvency law.
Further increase in company bankruptcies expected in 2024
According to Crif, the number of company bankruptcies could rise to up to 20,000 cases next year. That would still be fewer than the average of almost 26,200 bankruptcies annually since 1999. In the previous record year of 2003 there were 39,320.
According to Schlein, the majority of companies remain financially well positioned. However, the increasing number of major bankruptcies could lead to further bankruptcies. “In some cases, domino effects will ensure that insolvent companies drag other companies into insolvency with a time lag.”
According to Crif estimates, more than 305,000 companies or 10.1 percent currently have an increased risk of insolvency. The credit agency examined the creditworthiness of almost three million companies. For this purpose, information in the balance sheets, profit and loss statements, sales, payment histories and negative legal characteristics were evaluated, among other things.