The financial and economic crisis is increasingly putting companies under pressure. In 2008 the number of corporate insolvencies already rose again after a downwards tendency since 2003. During the first quarter of 2009 a total of 6,765 companies filed for bankruptcy. In comparison with the 4th quarter of last year, this means a rise by 11.3 percent.
Large regional and structural differences
The current survey by the financial information agency Bürgel, that analyses the insolvency development of companies during 1st quarter 2009, shows significant differences between the federal states, in the age of the companies and in the legal form. GmbHs (German limited liability companies) that are between 0 and 2 years old and have their head office in Bremen, are statistically speaking the ones most frequently hit by a corporate insolvency.
If one takes a look at the absolute figures, the most corporate insolvencies during 1st quarter 2009 could be observed in North Rhine-Westphalia with 1,335 cases, followed by Bavaria (794) and Lower Saxony (746).
Due to the different company structures in the individual federal states, these figures are, however, only meaningful to a limited extent.
In relation to the overall figures of the companies in the individual federal states one gets quite a different picture.
According to this, companies from Bremen went bankrupt most frequently, i.e. 32 cases per 10,000 companies, followed by Saxony-Anhalt (29) and Schleswig-Holstein (28). The lowest numbers of corporate insolvencies were reported in Hamburg and in Bavaria each with 13 cases per 10,000 companies, closely followed by Baden-Wuerttemberg with 15 bankruptcies.
Increases in comparison with the last quarter
If one compares the figures from the 4th quarter 2008 with the figures of 1st quarter 2009, one can see that in almost all federal states the numbers of corporate insolvencies has risen.
The strongest increases can be registered in Saxony-Anhalt (+36.65 percent), Hessen (+28.61 percent) and in Baden-Wuerttemberg (+28.60 percent). Only in North Rhine-Westphalia (–2.91 percent), Brandenburg (–1.64 percent) and in Berlin (–0.32 percent) are the corporate insolvencies on the downward trend.
Company age and insolvency
The risk of insolvency is not automatically signalised by the age of a company. 17.29 percent of all companies that filed for bankruptcy during 1st quarter 2009, were not older than 2 years. But also the over 10-year-old companies are not protected from insolvency. Thus, 26.62 percent of the 6,765 insolvent companies during 1st quarter 2009 were on the market for a period of between 11 and 20 years.
The risk of a corporate insolvency only decreases again for long-established companies. The lowest share (4.54 percent) of the insolvent companies was made up of companies that had existed on the market for longer than 50 years.
Legal form and insolvency
The largest share of insolvent companies is held by trade firms with 2,788 bankruptcies (41.21 percent) and GmbHs with 2,628 bankruptcies (38.85 percent). 62 AGs (corporations) that have gone bankrupt hold a share of only 0.92 percent. The remainder is divided among various legal forms.
A different picture is given when observing the insolvency rates of legal forms, i.e. the number of corporate insolvencies per 10,000 businesses. Here AGs are in first place with a rate of 26 bankruptcies per 10,000 corporations, followed by GmbHs with an insolvency rate of 23, GmbH & Co. KGs (16) and trade firms (13).
Main reasons for the increasing number of corporate insolvencies
Although at present there is a rising number of indications that the economic low will be reached by the summer of this year, optimism is rather premature. Many companies are simply lacking customers at the moment, their existing orders have been concluded. This circumstance is obvious from the considerable rise in the number of insolvencies and continued high short-time employment rate.
Both the domestic demand for investment goods on the part of the companies and exports have continued to fall over the past few months. The negative economy has its delayed effect on the job market a short time later. In view of the background of rising unemployment figures in 2009 a surge in demand from private consumers cannot be expected.
Due to the financial crisis bank loans are expensive and difficult to procure. The demand on the part of companies for loans from the state rescue funds is on the rise. Further problems for companies are outstanding debts or losses of payment from customers as well as the lack of equity. This means that over the next few months there will be an added danger that companies will be lacking liquidity.
As a result of this development, according to the assessment by the financial information agency Bürgel we can expect an increase in the number of corporate insolvencies to 34,000 cases within this year.