Persistently elevated bankruptcy rates remaining unchanged
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A chilling trend has emerged in the economic battleground. The slump isn't exhibiting signs of recovery anytime soon as more companies struggle to keep their heads above water. The gloomy scenario, however, isn't all doom and gloom.
The ongoing recession has sent Germany's corporate insolvencies soaring. Statistics from the Federal Statistical Office reveal a 12.1% jump in insolvency proceedings in February compared to last year—a trend that's been on an upward spiral since June 2023, showing no signs of abating. The insolvency court’s decision is the only piece added to the statistics, as it occurs approximately three months after the insolvency application.
With the groundbreaking data for the full year 2024 now available, a staggering 21,812 corporate insolvencies were recorded—a 22.4% surge from the previous year. Another concerning statistic: the total claims of creditors have more than doubled to an alarming 58.1 billion euros in 2024, compared to 26.6 billion euros in 2023. This surge is attributable to an increase in large insolvencies with claim amounts exceeding 25 million euros, which increased by a startling 127.5% to reach 314 cases.
A Long Menu of Woes, but some silver linings
Looking at 10,000 companies, there were 63.5 corporate insolvencies in 2024, mostly in industries such as transport and warehousing, construction, and other economic services like temporary work. While consumer insolvencies increased only by 6.5% to 71,207 cases, the escalating number of large insolvencies poses the risk of "domino effects" among related companies.
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Experts anticipate an uptick in corporate insolvencies in Germany this year, with Creditinfo expecting up to 26,000 cases. Crif Germany CEO Frank Schlein sums up the issues: high energy costs, supply chain challenges, and political uncertainty. As the number of large cases escalates, so does the potential for cascading effects on connected businesses.
Creditreform had earlier projected this year's corporate insolvencies could even exceed the record high of the crisis year 2009, reaching over 32,000 cases. On the other hand, the Leibniz Institute for Economic Research Halle (IWH) identifies early indicators that the increase in corporate insolvencies might plateau or even dip slightly.
Source: ntv.de, ses/dpa
- Corporate Insolvencies
- Economic downturn
- Recession
- The community policy and employment policy should address the surge in corporate insolvencies, particularly in industries like transport and warehousing, to mitigate the potential domino effects on connected businesses.
- To curb the increasing number of large insolvencies, the employment policy needs to emphasize early intervention strategies to assist struggling companies and prevent further insolvencies.
- Despite the daunting 207% increase in total claims of creditors due to corporate insolvencies, there's a glimmer of hope: experts predict a possible plateau or dip in the number of insolvencies, according to early indicators from the Leibniz Institute for Economic Research Halle (IWH).
