Corporate Insolvencies 2012

The number of corporate insolvencies has continued to decrease in 2012. On the whole, over the year 29,619 companies filed for bankruptcy in Germany – 2.2 percent less than the previous year. This was announced by the financial information agency Bürgel  following the current survey “Corporate Insolvencies 2012”. “The European debt crisis and the weak phase in the German economy towards the end of the year 2012 have led to a rise in corporate insolvencies in Germany during the survey period,” the executive manager of BÜRGEL, Dr. Norbert Sellin, explains. The number of corporate insolvencies is at its second lowest level of the past ten years. According to BÜRGEL, there were only less corporate insolvencies in 2007. 

The percentage decline is less than in previous years (2010: minus 4.4 percent; 2011: minus 6.2 percent). “In the course of the past year the damage incurred by creditors due to  corporate insolvencies has severely increased,“ Dr. Sellin declares. This was particularly due to the high number of major bankruptcies – in particular Schlecker and Neckermann. The insolvency damage incurred throughout the Federal Republic amounted in 2012 to approx. 38.3 billion euro compared with 31.5 billion euro the previous year. 

For 2013 BÜRGEL is expecting a slight increase in corporate insolvencies to 30,300 cases. “This estimated increase is based on the sinking economy in Europe and the weak forecasts for growth in Germany,” Dr. Sellin emphasises. “Subsequently these economic  influences can have their effects on the number of corporate insolvencies”. 

During the fourth quarter of 2012 this negative trend was already recognisable – with a rise in the number of cases by just under 1.3 percent in comparison with the previous year. 

North Rhine-Westphalia leads the insolvency statistics in absolute figures with 11,176 cases and the in relative values with 160 bankruptcies per 10,000 companies. But also Schleswig-Holstein and the Saarland (each with 108 corporate insolvencies per
10,000 companies) show poor results. Whereas the federal average lies at 92 insolvencies per 10,000 companies, in 2012 the lowest number of corporate insolvencies occurred in  Baden-Württemberg (51) and Bavaria (59).

Insolvency proceedings per Federal State

Whereas the number of cases in 14 federal states has decreased, Thuringia records a rise in insolvency figures by 3.8 percent. Schleswig-Holstein announces 2.4 percent more corporate insolvencies than in 2011. The strongest decrease was recorded in 2012 in Bremen and Mecklenburg-Western Pomerania with 12.2 percent less corporate bankruptcies.

Percentaged change in corporate insolvencies

Commercial enterprises were the worst hit by bankruptcy in 2012. Their share of the insolvency statistics comprises 40.6 percent. This corresponds to 12,025 cases. However, the number of commercial businesses that had to file for bankruptcy in 2012, has decreased by 3.7 percent in comparison with the previous year. Also the GmbH (limited liability company) is among the worst hit legal forms. Every third insolvent business in 2012 is a GmbH (share; 34.3 percent; in absolute figures: 10,149). 

The meanwhile third-largest share of the corporate insolvency occurrences of 5.2 percent in Germany falls on the legal form of the entrepreneurial company (limited liability), also known as a Mini-GmbH. This legal form incurred a total of 26.1 percent more insolvencies during the past year than during the reference year 2011. In the case of corporations, the share of the corporate insolvency statistics is currently only 0.8 percent. However, the case figures have risen in this category by 0.9 percent in comparison with 2011.

Just under 40 percent of the corporate insolvencies are filed for by companies that were active on the market for up to four years. More than one quarter of all insolvencies  (27 percent) are allocated to companies that have been active for a maximum of two years on the market. In 2012 8,007 of these young businesses were hit by bankruptcy. In  comparison with the previous year, the case figures fell slightly in this category by  0.6 percent. On the other hand the group of companies that were active on the market for between 3 and 4 years (share of the insolvency statistics: 12.4 percent), recorded a rise by 2.9 percent to 3,668 cases in comparison with the reference period. If one regards their founding dates during or shortly after the financial crisis, it becomes apparent that many of these young companies did not manage to overcome their difficult launching conditions.

In particular service-providers slithered into bankruptcy in 2012 (51.5 percent of all cases). But also the retail market with 6,673 corporate insolvencies (share of the insolvency scene: 22.5 percent) and the building trade with 4,267 (share: 14.4 percent) are having to cope with severe losses. 

The main causes for corporate bankruptcies still remains firstly the lack of new orders or the cancellation or postponement of already placed orders. Secondly, domino effects cause insolvent companies to sweep other companies with them into bankruptcy. “Even healthy companies can get into economic difficulties as around 20 percent of the insolvent companies are affected by domino effects“, Dr. Sellin explains. Thirdly, management errors are often responsible for an increased insolvency risk. “A wrong assessment of the market or a lack of competitiveness can lead to the failure of a company,” Dr. Sellin concludes.

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