Fashion and mechanical engineering
Major bankruptcies are increasing rapidly
November 27, 2023, 11:14 a.m
More and more German companies with sales of over 50 million euros are slipping into bankruptcy, especially in the fashion industry. But large mechanical engineering companies are also coming under the wheels, almost as many as hospitals.
According to a study by the credit insurer Allianz Trade, there are more and more large bankruptcies in the German economy. “The major bankruptcies have returned this year and are heading towards the highest level from 2020,” says Allianz Trade insolvency expert Maxime Lemerle. There have been a particularly large number of major bankruptcies so far this year in fashion retail, hospitals and mechanical engineering. Allianz Trade defines major insolvencies as bankruptcies of companies with an annual turnover of at least 50 million euros.
According to the study, the number of major bankruptcies in Germany is heading towards the record level of 2020, with 45 cases in the first nine months of 2023. For comparison: In the same period in 2022, there were a good third fewer, with 26 major bankruptcies and in 2021 there were only 17 such bankruptcies. “2020 marked the highest level of insolvencies since 2016 with 58 major insolvencies in the year as a whole and 44 cases in the comparable period in the first new months.”
A total of twelve large textile companies and fashion retailers will have slipped into insolvency by September 2023, as will six clinics, according to the study. “This fits with the situation report from the German Hospital Institute (DKI), according to which two thirds of German hospitals currently describe their financial situation as bad or very bad, and this is even higher for medium-sized hospitals,” write the insolvency experts at Allianz Trade. There were also some major bankruptcies in mechanical engineering with five cases as well as in the metal (four) and construction industries (three).
Most bankruptcies occur in construction
According to the study, the most cases of insolvency across all company sizes have so far been recorded in the construction industry, followed by retail and companies in the service sector. “The retail sector recorded the strongest increase in the number of cases compared to the same period last year, but the hospitality industry was also showing weakness even before the VAT increase.”
Allianz Trade boss for the German-speaking region, Milo Bogaerts, is also predicting a difficult time for retailers for the upcoming Christmas business. “This year, significantly fewer presents are likely to end up under the Christmas tree,” says Bogaerts. “Food prices remain high despite the lower inflation rate. Consumers are therefore saving on all other expenses: they go out less, buy less clothing – and Christmas presents.”