Business insolvencies during the initial half of the year reach a nearly decade-high mark.

Business insolvencies during the initial half of the year reach a nearly decade-high mark.

Businesses are battling the repercussions of the economic downturn in 2023, ongoing crises, and sluggish growth in the initial half of 2024, as stated by Patrik-Ludwig Hantzsch, head of Creditreform Economic Research. In his words, these challenges are basically grinding numerous businesses into the ground.

Creditreform predicts that insolvencies will persist to rise in the rest of the year, exceeding pre-Corona levels for the first time overall. The agency attributes this to the "piled-up issues from past crises" faced by many companies. A significant number of these businesses were burdened with debt and were unable to fulfill their payment obligations due to the unfavorable economic climate.

In the first half of the year, according to Creditreform, a notable number of medium-sized and large companies were compelled to file for bankruptcy - consequently, claims increased (from 13 billion to 19 billion Euro) and the number of impacted employees rose. Recent headlines have featured the bankruptcies of companies like Galeria Karstadt Kaufhof and FTI-Touristik.

Creditreform approximates that around 133,000 employees were impacted by bankruptcies from January to June. In contrast, the previous year's period saw 125,000 affected. This doesn't necessarily imply that they lost their jobs: The goal of insolvency law is focused on restructuring and preserving companies and jobs, explained Hantzsch. This explanation also accounts for the rise in case numbers in recent years. More companies are viewing bankruptcy as a potential way out during a crisis.

In the first half of the year, consumer bankruptcies also increased: Creditreform reported 35,400 cases, which was 6.7 percent more than in the previous year's period. Apart from high inflation and the interest rate change, leading to higher loan interest rates, the new consumer bankruptcy law at the end of 2020 was also responsible, according to the agency. The reform makes the process more appealing for debtors by allowing speedier debt relief.

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1. The rise in corporate insolvencies during the initial half of the year has once again placed Germany in a precarious economic situation, according to Credit agency Creditreform.
2. Despite the challenging economic situation, Creditreform's head, Patrik-Ludwig Hantzsch, emphasized that insolvency law focuses on restructuring companies and preserving jobs.
3. In the face of corporate insolvencies and recession, Creditreform attributes the rise in insolvencies to "piled-up issues from past crises" and the impact of the Coronavirus crisis.
4. Hantzsch pointed out that many medium-sized and large companies in Germany have been forced into insolvency during the first half of the year, leading to increased claims and affected employees.
5. As a result of these corporate insolvencies, around 133,000 employees in Germany were impacted in the first half of the year, an increase from the previous year's period.
6. In addition to high inflation and interest rates, Creditreform highlighted the new consumer bankruptcy law at the end of 2020 as a contributing factor to the rise in consumer bankruptcies in the first half of the year.
7. Looking ahead, Creditreform expects corporate insolvencies to continue rising in the second half of the year, surpassing pre-Corona levels for the first time overall.

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