Federal Statistical Office – the number of bankruptcies drops sharply – economy

The number of business bankruptcies in Germany fell sharply in May. Business bankruptcies fell 25.8% in one year to 1,116 claims, as the Federal Statistical Office reported on Tuesday. The reason for the downward trend in recent months was the long suspension of the obligation to file for bankruptcy, with which politicians want to avoid a wave of bankruptcies. At the end of 2020, the state suspended the obligation to file for bankruptcy for over-indebted companies. Until the end of April 2021, this also applied to companies for which state aid planned since November 2020 was still pending. Since May, the obligation to apply for insolvency proceedings is fully in force again. For the month, among other things, due to court processing time, no increase in bankruptcies was noticeable, statisticians said: “This will likely only become apparent in the coming months of reporting.”

The standard insolvency procedures requested, when stagnation has recently arisen, provide information on future developments. Also in July, the number was almost at the same level as the previous month (minus 0.1 percent) and the same month last year (plus 0.4 percent). The Halle Institute for Economic Research (IWH) recently announced that the number of bankruptcies fell to an all-time high of 639 partnerships and companies in July. This is ten percent less than the previous month and a good 25 percent less than the same month last year.

According to the Federal Statistical Office, most business failures in May occurred in construction with 180 procedures and in retail, including auto repair shops, with 168 procedures. District courts estimated the expected claims of creditors for May at around seven billion euros, after just under 3.1 billion euros a year ago. The context here is that large companies filed for bankruptcy only in May 2020.

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