But the level is still relatively low
The increasing number of company bankruptcies is just the beginning
March 15, 2024, 11:01 a.m
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In the past year, corporate bankruptcies have increased by more than a fifth. The poor economy, expensive loans and high inflation are to blame. Although there are still fewer bankruptcies than before the pandemic, it is unlikely to stay that way.
Economic slowdowns, high inflation and rising credit costs caused the number of company bankruptcies to rise last year. The number of corporate insolvencies filed increased by 22.1 percent to 17,814, as the Federal Statistical Office announced. In 2022 it was only slightly above the low level of the year 2021, which was characterized by special Corona regulations (+4.3 percent).
Compared to the pre-Corona year 2019, there were even 5.0 percent fewer bankruptcies this time. “In historical comparison, the number of corporate bankruptcies was very low,” the statisticians concluded. During the financial crisis of 2009, for example, it was much higher at 32,687.
The local courts put the creditors’ claims from the corporate insolvencies reported last year at around 26.6 billion euros. That is significantly more than 2022 with around 14.8 billion euros. One reason: 138 major bankruptcies were registered with claims of at least 25 million euros – 38 percent more than in 2022.
More and more customers are unable to pay
Recently, bankruptcies of well-known companies, especially in the fashion retail sector, made headlines: Peek & Cloppenburg, Gerry Weber, Reno, Salamander, Görtz and Signa Sports United. The German Chamber of Commerce and Industry (DIHK) expects more bankruptcies this year too. “The major economic and structural challenges in Germany are affecting the economy,” said DIHK medium-sized business expert Marc Evers. “Unfortunately, a further increase in corporate insolvencies can be expected in the coming months.”
More and more companies are reporting that their customers are having payment difficulties. A DIHK survey showed that the proportion of companies affected by increasing bad debts has now risen to a quarter, particularly in the area of health and social services or in vehicle sales and repairs.
The current development in the number of regular insolvencies filed also points to another difficult year. These rose by 18.1 percent in February compared to the same month last year, after an increase of 26.2 percent in January. “Since June 2023, double-digit growth rates have been observed year-on-year,” said the statisticians.
The German economy shrank by 0.3 percent last year – also because consumers held back on spending money in view of an inflation rate of 5.9 percent, while loans became noticeably more expensive due to the European Central Bank’s tighter monetary policy.