So far, the corona crisis has not led to an increase in company bankruptcies. But Creditreform believes that could change soon. The situation is very different with consumer bankruptcies.
According to the credit report agency Creditreform, Germany is threatened with “a wave of insolvency of a previously unknown extent” if the economy does not quickly recover from the economic slump caused by the corona pandemic. According to many experts, there could be an increase in company bankruptcies of up to 20 percent, said the chief executive of Creditreform, Volker Ulbricht, on Monday in Düsseldorf.
In the first half of the year, the number of corporate insolvencies in the Federal Republic fell surprisingly yet again by 8.2 percent to 8900 cases, despite Corona. Ulbricht emphasized that the bankruptcy process has become disconnected from the actual economic situation of the companies.
The reasons for this are above all the billion-dollar government support measures for companies damaged by Corona and even more the suspension of the obligation to file for insolvency until the end of September. The economic expert judged that the measures had apparently exceeded their target in their effectiveness and had also spared some companies from going to the bankruptcy court, which had already been in danger of bankruptcy before the crisis. The suspension of the obligation to file for insolvency initially applies until the end of September, but can be extended for a further six months until the end of March.
The bankruptcy wave was only postponed, emphasized Volkert. The risk of a significant worsening of insolvency events in the second half of the year and in the coming year is increasing.
Creditreform put the damage caused by the almost 9,000 corporate insolvencies in the first half of the year at around twelve billion euros. Around 125,000 jobs are threatened or have already been lost in the companies concerned and their environment. The trend of recent years has been confirmed, according to which many bankruptcy candidates are older, already established companies. After all, almost half of the bankruptcies in the first half of the year were made by companies that were older than ten years.
Corona crisis has hardly any effect on consumer bankruptcies
Creditreform sees little effect of the corona crisis on consumer bankruptcies so far. The number of private bankruptcies fell in the first six months by 6.4 percent to 30,800. Until mid-March, the general economic conditions for consumers were still good – characterized by a stable labor market and low interest rates, emphasized Ulbricht.
In the meantime, rising unemployment figures and a massive expansion of short-time working have narrowed the financial leeway of many consumers. Nevertheless, no dramatic change in the consumer bankruptcy situation is expected in the second half of the year. Because it is a long ordeal until an overindebted consumer actually gets into insolvency proceedings.
Ultimately, the future development of consumer bankruptcies depends on whether the crisis on the labor market can be overcome with short-time working or whether there will be massive job cuts in Germany in the end. “If we get back into pronounced unemployment, sooner or later the number of consumer bankruptcies will rise again,” said Ulbricht.