Significantly more company bankruptcies than expected
It has been a while since Galeria or Esprit were the only ones: According to an analysis, significantly more large companies have found themselves in a financial predicament in the first half of this year than in 2023. Particularly affected: Real estate companies, automotive suppliers, and machinery manufacturers.
The number of insolvencies in Germany has reportedly increased more than expected this year. In the first six months of this year, 162 companies with a turnover of more than ten million Euros fell into financial distress - a 41% increase compared to the previous year's period, according to "Handelsblatt," citing an analysis by the restructuring consulting firm Falkensteg.
The number of insolvencies is significantly higher than the 30% increase that restructuring experts had anticipated at the beginning of the year. Particularly affected are real estate companies, automotive suppliers, and machinery manufacturers. Among the insolvent companies are well-known names such as the travel agency FTI, the department store chain Galeria, or the fashion company Esprit.
Of the 279 companies that filed for insolvency in 2023, only 35% could be saved by the end of the first half of 2024 - either through a sale to an investor or because the creditors approved a reorganization plan. In the same period three years ago, this was still possible in 57% of cases.
The reasons for the insolvency wave include the aftermath of the Corona pandemic, inflation, rising energy and material costs, and a weak demand. Complicating matters are location disadvantages such as labor shortages and bureaucracy. Global crises, poor economic outlooks, and high interest rates are making restructuring and investments in struggling companies increasingly unattractive.
The surge in insolvencies among real estate companies, automotive suppliers, and machinery manufacturers can be attributed in part to inflation and rising energy and material costs. Due to these economic challenges, fewer than half of the insolvent companies in 2023 were successfully restructured or sold by the midpoint of 2024, compared to three years prior. Amidst these financial difficulties, even established names like FTI, Galeria, and Esprit have faced insolvency due to the ongoing impact of Corona measures and weak demand.
