WDuring the corona pandemic, there were surprisingly few company insolvencies because the state promised help and temporarily suspended the obligation to file for insolvency. But that’s over. According to provisional figures from the Federal Statistical Office, the number of regular insolvencies rose by 13.2 percent in March compared to the previous month, after growing by 10.8 percent in February compared to January.
For January, final figures show 1,271 corporate insolvencies filed with German district courts, which is 20.2 percent more than in the same month last year. In January, companies from the construction industry and trade were hit hardest. In December 2022, insolvencies had already risen by 19.7 percent compared to the same period last year. The current increase in March is therefore not an outlier but fits into a trend.
Recently, the insolvencies of the shoe retailers Görtz and Reno or the protective shield proceedings of the fashion chain Peek & Cloppenburg made headlines. Is there a big wave of bankruptcies coming? Experts rather expect a normalization of insolvency events. The international credit insurer Allianz Trade raised its insolvency forecast for Germany for 2023 significantly last week and now expects an increase in insolvencies of 22 percent instead of the previous 15 percent. This is mainly due to the bank turbulence triggered by the rise in interest rates, which led to more restrictive lending.
Only the appearance of a wave of bankruptcies
However, the 17,800 insolvencies now expected for 2023 would still be 5 percent fewer than before the corona pandemic. “It’s still not a wave of bankruptcies, even if double-digit growth initially appears,” said Milo Bogaerts from Allianz Trade. Even by the end of 2023, Germany is unlikely to have reached the pre-pandemic level. According to Bogaerts, this will only be slightly exceeded again in 2024 after a further increase in insolvencies of 6 percent.
According to an analysis published at the beginning of April, the economic research institute IWH also assumes that events will normalize. “The times of unusually low insolvency numbers are over for the time being,” said IWH insolvency researcher Steffen Müller. However, the IWH leading indicators do not point to a further increase in insolvencies in the coming months.
Insolvencies are an important indicator of the state of an economy because they threaten jobs and the claims of banks and suppliers of the company concerned. The Federal Statistical Office puts the probable claims of creditors from the company insolvencies reported to the district courts in January 2023 at almost 2.3 billion euros. According to an IWH analysis, 8,022 jobs were affected by insolvencies in March. However, at least part of the jobs in insolvent companies can often be saved.
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