Fear A Wave of Bankruptcies in Germany

According to German media, 2021 will be the year of the wave of bankruptcies and the banking crisis

Despite the pandemic and lockdowns, the number of corporate bankruptcies fell in 2020 to the lowest level in more than 20 years. But appearances are deceptive: the bankruptcy wave was only delayed by government intervention in the form of relief measures and changes in the law. 2021 will be the year of bankruptcies and the risk of contagion in the banking sector will increase.

Despite the pandemic and lockdowns, the number of corporate bankruptcies fell in 2020 to the lowest level in more than 20 years. But appearances are deceptive: the bankruptcy wave was only delayed by government intervention in the form of relief measures and changes in the law. 2021 will be the year of bankruptcies and the risk of contagion in the banking sector will increase.

Delayed wave of bankruptcies
“The German economy has been pushing a wave of insolvencies for months,” stated the chairman of the credit insurance commission in the German Insurance Association (GDV), Thomas Langen.

“Only when both over-indebted and insolvent companies have to file for bankruptcy again from January will we see how big this increase is and what economic upheavals the corona pandemic has actually caused,” says Langen.

The legislature had suspended the obligation to file for insolvency for companies whose insolvency or over-indebtedness is due to the consequences of the Covid 19 pandemic. This special regulation, which has been in force since March, expired at the end of September for

In exceptional cases, extension until the end of January 2021
Companies that have submitted an application for government November and December aid in the period from November 1, 2020 to December 31, 2020 or would have been entitled to do so but did not submit the application can even wait until January 31 for them Have to file for bankruptcy.

More bankruptcies in the coming year
Creditreform is assuming 16,300 bankruptcies for the current year, 13.4 percent less than 2019. It would be the lowest level since 1993. However, due to the special regulation in insolvency law, the number is not as meaningful as it should be. According to Creditreform, more than half of all registered insolvency cases (58.1 percent) were already in the service industry, which was particularly affected in 2020.

But what will the situation look like in the coming year? The credit agency expects an increasing number of bankruptcies in 2021, especially for smaller companies.

Reviewer overview

Fear A Wave of Bankruptcies in Germany - /10

Summary

0 Bad!