During the first quarter of 2011 the German economy has again recorded falling figures in corporate insolvencies with 7,424 cases in all. In comparison with the reference quarter in 2010, 8.7 percent less companies filed for bankruptcy. Correspondingly, the Hamburg financial information agency Bürgel expects up to 30,000 corporate bankruptcies for 2011 – a level that existed before the economic crisis.
“The economy in Germany has been continually improving over the past few months,” says Bürgel Managing Director Dr. Norbert Sellin. This is apparent from the positive values both in the decreasing corporate insolvency figures and in the domestic demand. “In particular the distinct rise in German exports of plus four percent in comparison with the first quarter 2010 have a positive effect on the local economy,” Sellin explains.
The possible insolvency of some European states and the effect this has on the Euro present a great economic risk. In addition, the increasing raw material prices could cause the economic engine to sputter.
The corporate insolvencies during the first quarter 2011 are distributed most strongly among the federal states North Rhine-Westphalia with 1,527 bankruptcies, Bavaria (911) and Lower Saxony (821). However, regarded relatively, the rates fluctuate distinctly: Bavaria with 16 corporate insolvencies per 10,000 companies and Baden-Wuerttemberg (18) report the lowest figures, followed by Hesse (21 bankruptcies) and Rhineland-Palatinate (22). Although the federal average lies at 23 cases per 10,000 companies, Bremen comes off worst with 50 insolvencies. Similar high values are recorded in Saxony-Anhalt (42) and Saxony (34).
However, the case figures are on the decline in 13 federal states. The best results of the first quarter were from Saxony-Anhalt with a decrease by 17.1 percent. Also considerably less insolvency cases were recorded by Hesse (minus 16.4 percent), Berlin (minus 16.0 percent) and Rhineland-Palatinate (minus 14.5 percent). Only the Saarland with a clear plus of 31,9 percent, Brandenburg (plus 2.1 percent) and Bremen (with a slight increase by 0.9 percent) are having to cope with rising figures in corporate insolvencies.
Throughout the Federal Republic, 3,400 businessmen and sole proprietorships constitute the greatest share of corporate insolvencies, i.e. 45.8 percent during the survey period. The limited liability companies (GmbHs) also come off badly during this period with a share of 36.3 percent. In comparison with the first quarter 2010 the insolvency figures are, however, on the decline in all legal forms – headed by the “GmbH & Co. KG” with minus 20.9 percent.
With regard to the age of the companies, a quarter (25.3 percent) of the corporate bankrupts during the first quarter 2011 had not been on the market for more than two years. This is linked with the fact that young companies are often lacking equity capital needed for surviving crises. Also, access to the capital market is more difficult and cost-intensive for them. However, the share of the young companies in comparison with the reference quarter 2010 has fallen by 11.3 percent.
With 24.5 percent the second highest share of all insolvencies can be found among companies that have been active on the market for between 11 and 20 years. The least endangered, on the other hand, are companies that have been in existence for more than 50 years. Their share of the bankruptcies by age amounts to 2.7 percent only.
The reasons for corporate insolvencies are diverse: they are firstly influenced by a lack of new orders or the cancellation or postponement of already placed orders. Secondly domino effects cause insolvent companies to drag other companies with them into insolvency. Thirdly, the still restrictive loan allocation by the banks constitutes a threat to corporate existence – especially in the case of small and young companies. Fourthly, internal errors or the lack of equity capital are responsible for an increase in the insolvency risk factor.