"Permanent burdens" for companies: Number of bankruptcies on the rise

Economic situation - "Permanent burdens" for companies: Number of bankruptcies on the rise

The economic downturn, increased interest rates and high energy prices have driven up the number of company bankruptcies this year. According to estimates by the credit agency Creditreform, 18,100 companies across Germany will have filed for insolvency by the end of the year. According to the calculations, this would be 23.5 percent more than in the previous year. "More and more companies are collapsing under the constant pressure of high energy prices and the interest rate turnaround," explained Patrik-Ludwig Hantzsch, Head of Creditreform Economic Research, on Monday in Frankfurt at the presentation of the figures.

According to Creditreform, an average of 60 companies filed for insolvency for every 10,000 companies in Germany at the end of last year (previous year: 48). This so-called insolvency ratio varies from state to state. It ranges from 120 in Bremen to 40 in Thuringia. At 77, North Rhine-Westphalia is above the average (previous year 62), as are Hesse (61), Schleswig-Holstein (64), Saarland (67), Hamburg (81), Berlin (103) and Bremen (120).

Like other experts, Creditreform expects a further increase in company insolvencies. "In these difficult economic conditions, the number of insolvencies will continue to rise significantly in the coming months," said Hantzsch. The number of cases has therefore almost normalized and the special effects from the corona period have largely evaporated. In order to avert a wave of bankruptcies as a result of the pandemic, the state had granted temporary exemptions. By 2022, insolvency figures had risen again for the first time since the 2009 economic crisis.

In contrast, the robust situation on the labor market has so far prevented an increase in consumer bankruptcies. Although the downward trend of the previous year did not continue, the number of consumer insolvencies remained almost unchanged at an estimated 66,200 cases (2022: 65,930). However, in view of the weak economic outlook, Creditreform expects rising figures here too, especially as the over-indebtedness situation of many people has deteriorated significantly.

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1. In Bremen, where the insolvency ratio is alarmingly high, Patrik-Ludwig Hantzsch, Head of Creditreform Economic Research, expressed concern about the rising number of company bankruptcies.
2. Hantzsch presented the estimates by Creditreform, predicting 18,100 company insolvencies by year-end, a 23.5% increase from the previous year.
3. Creditreform identified North Rhine-Westphalia as having the highest insolvency ratio among German states, surpassing the national average of 60 insolvencies per 10,000 companies.
4. Hesse, Schleswig-Holstein, Saarland, Hamburg, Berlin, and even Bremen itself, with its staggering 120 insolvencies per 10,000 companies, also saw increases in company insolvencies.
5. Despite these high insolvency rates, the labor market's robust condition has so far prevented a significant increase in consumer bankruptcies.
6. However, Creditreform anticipated an uptick in consumer insolvencies due to the weak economic outlook and the significant deterioration in many people's over-indebtedness situation.
7. In Düsseldorf, the Insolvency Court faces an overwhelming caseload as more companies in Germany struggle amidst the economic downturn, high interest rates, and skyrocketing energy prices.
8. As the regulatory body for credit references in Germany, Creditreform Frankfurt plays a critical role in monitoring the financial health of companies and individuals, helping to mitigate the impact of bankruptcies and other financial challenges.

Source: www.stern.de