Company insolvencies in Germany have also continued to fall in the first six months of 2017. 10,427 companies had to file for insolvency between January and June. As a result, the number of company bankruptcies was down by 5.5 percent compared to the same period in the previous year. Credit agency CRIFBUERGEL is forecasting up to 21,000 corporate insolvencies for the entirety of 2017. This would not only be the eighth decrease in a row: it would also mark the lowest level of company bankruptcies since 1999.
"The overarching internal economic conditions for companies in Germany remain good. They can benefit from the stable economy and favourable financing terms. In addition, consumers' income and purchasing power are continuing to increase, which in turn has a positive impact on companies," explains CRIFBUERGEL's Managing Director, Ingrid Riehl, when talking about this fresh decline in insolvencies. Positive developments over the last few years have also ensured that many companies have been able to improve their equity capital ratio. "This enables companies to increase their financial stability and become more resistant to smaller corporate crises," says Riehl.
CRIFBUERGEL calculates that the insolvency trend will reverse slightly in 2018. Stagnating or rising insolvency figures can no longer be ruled out for the coming year. 21,000 company insolvencies from a basis of four million companies in Germany sees a level reached that will be hard to undercut. This is because, independent of the economic situation and other beneficial conditions for companies, there are companies who have to file for insolvency for other reasons. For example, start-ups fail every year, or there are connected insolvencies caused by the domino effect. Management errors are also at the root of numerous company insolvencies.
In the first six months of 2017, losses from insolvencies totalled around 11.5 billion euros. On average, this works out to lost funds amounting to almost 1.1 million euros per insolvency. The collapse of several economically significant companies is at the heart of this continually high level of losses from insolvency. Prominent examples of company insolvencies in the first six months include SolarWorld, boating trip operator Rickmers Holding, the furnishing chain Butlers, or Schneider Freight.
An examination of the individual federal states reveals that there are significant regional differences with regard to insolvency proceedings in Germany during the first six months of 2017. In absolute terms, North Rhine-Westphalia (3,130 company insolvencies), Bavaria (1,247) and Lower Saxony (943) are at the head of the insolvency leaderboard. An analysis of insolvency density (company insolvencies per 10,000 companies) shows a different result. According to this, companies in Bremen are the most vulnerable to insolvency (51 insolvencies per 10,000 companies). The national average for the first six months of 2017 was 32 company bankruptcies per 10,000 companies. Over the first six months of the year, companies in Baden-Württemberg, Bavaria and Saxony appeared to be the least prone to insolvency, by contrast (21 insolvencies per 10,000 companies).
As in the previous year, Dortmund again tops the leaderboard for insolvencies in the first six months of 2017 (54 insolvencies per 10,000 companies). These were the findings of an analysis of 30 German cities. Gelsenkirchen (50), Essen (50) and Duisburg (49) see Dortmund followed by another three cities in North Rhine-Westphalia. The efficient Swabian economy is also evident in the density of insolvency in the cities. Stuttgart is in the best position within the city rankings. Here, the insolvency rate is 23 bankruptcies per 10,000 companies. This nationwide trend of declining company insolvencies is not reflected in the states of Baden-Württemberg (plus 14.8 percent), Berlin (plus 13.5 percent) and Thuringia (plus 2.9 percent). The sharpest decline in company insolvencies during the first six months of 2017 can be seen in Saarland. Almost a third fewer corporate bankruptcies were registered here compared to the same period in the previous year (minus 32 percent).
Entrepreneurial companies (limited liability) remain the most risky legal form in terms of insolvencies. The insolvency density for entrepreneurial companies (1,080 corporate insolvencies) amounted to 101 corporate insolvencies per 10,000 companies.
Looking at the main sectors, it is evident that logistics companies 42 insolvencies per 10,000 companies) and construction firms (40) are affected by insolvency at an above-average rate. The lowest insolvency density is to be found in the energy sector, with just 12 bankruptcies per 10,000 companies.
However, most insolvencies in Germany are down to micro-companies. The proportion of companies with a maximum of 5 employees was 80.1 percent for the first six months of 2017. Subsequently, the number of insolvencies decreases as the number of employees increases. Companies with 51 or more employees only have an insolvency rate of 2.1 percent.
14.2 percent of companies in Germany are only active in business for a maximum of two years before filing for insolvency. The current study also shows that more than half (58.4 percent) of insolvent companies are less than ten years old. The reasons for the bankruptcy of young companies are primarily due to non-marketable business ideas.