A Slight 3.3% Boost in Corporate Collapses; The Uptick Subsides
Corporate insolvencies witness a rise, decelerating the pace.
Facebook Twitter Whatsapp E-Mail Print Copy Link Last month, the number of corporate bankruptcies saw a slight surge: it increased by 3.3 percent year-over-year, as per the Federal Statistical Office based in Wiesbaden. This makes April the second consecutive month witnessing a single-digit growth rate. Previously, the number of corporate collapses had consistently surged by double digits since the summer of 2024.
Yet, the German Chamber of Industry and Commerce underscored that there is no room for complacency just yet.
The statistics take into account applications for regular bankruptcy only after a ruling by the competent court. Consequently, the actual date of the bankruptcy application often lies approximately three months prior.
Recapping February's results, as published by the statistics office, the local courts reported 2,068 regular bankruptcies, marking a 15.9 percent rise from the previous year. The aggregate claims of creditors totaled around nine billion euros, substantially more compared to the approximately 4.1 billion euros in the preceding year. The industries with the highest incidence of bankruptcies were transport and warehousing, other services, and the hotel and restaurant sector.
The February figure, as explained by the chief analyst of the German Chamber of Industry and Commerce (DIHK), Volker Treier, is the highest in a dozen years. "Sluggish demand at home and abroad, escalating uncertainties due to US trade policy, and burdening domestic conditions from taxes, energy costs, and bureaucracy are all diluting corporate profitability," he remarked.
Behind the Scenes:
- Economic Struggles: Economic turmoil or instability may exacerbate the risk of bankruptcy. Factors such as decreasing consumer demand, supply chain disruptions, or mounting costs can weaken financial stability within companies.
- Supply Chain Woes: Supply chain challenges, which may have been exacerbated by the lingering COVID-19 pandemic or geopolitical tensions, can severely impact businesses with intricate supply networks.
- Energy and Resource Burdens: Increased energy costs have significantly burdened companies in 2022, especially for energy-intensive industries, due to geopolitical strife and other factors.
- Regulatory Regime: Changes in regulations or legal frameworks can also impact businesses. For instance, any new rules or laws that increase compliance costs could affect companies' financial health.
- Global Market Forces: Fluctuations in global markets, like alterations in trade policies or tariff implementations, can impact international trade and companies reliant on exports.
In essence, while specific factors for April 2022 are not disclosed, these general economic and business conditions likely contributed to the uptick in bankruptcies during that period.
- Despite the recent 3.3% increase in corporate bankruptcies, only the applications for regular bankruptcy after a court ruling are considered in the statistics.
- The actual date of the bankruptcy application often lies approximately three months prior to when it is recorded in the statistics.
- The industries with the highest incidence of bankruptcies in February 2022 were transport and warehousing, other services, and the hotel and restaurant sector.
- According to the chief analyst of the German Chamber of Industry and Commerce, factors such as sluggish demand at home and abroad, escalating uncertainties due to US trade policy, and burdening domestic conditions from taxes, energy costs, and bureaucracy are all diluting corporate profitability, potentially increasing the risk of insolvency and bankruptcy.
