Moderate Uptick in Company Insolvencies Slows Down
Rise in Corporate Insolvencies Stalls Progress
Let's talk shop, mate! The Federal Statistical Office recently reported a slight increase in company insolvencies in April - a 3.3% rise compared to the previous year. This makes April the second month with a single-digit increase rate, a relief after the double-digit increase we've seen since summer 2024. But, hold your horses, because the German Chamber of Industry and Commerce (DIHK) is quick to remind us that it ain't all clear yet.
You see, the actual insolvency applications aren't counted until a decision by the competent court. This means the time of application is usually about three months earlier. So, the final results for February are what we've got now: 2068 regular insolvencies, which is 15.9% more than in the previous year. The creditors' claims amounted to around nine billion euros, almost double the claims from the previous year. The sectors hit the hardest were transport and warehousing, other services, and the hotel and restaurant industry.
DIHK's chief analyst, Volker Treier, explained that "sluggish demand here and abroad, high uncertainties not least due to US trade policy, and high burdens on the domestic site through taxes, energy costs and bureaucracy - all of this is eroding the profitability of companies."
While the specific slowdown in the rate of increase in April is not directly covered in recent data, factors like ongoing government support, improving economic conditions, and the gradual exhaustion of early pandemic-induced pressures might have played a role. Let's take a peek at what's happening in the broader context of 2023 and 2025 to get a better understanding of the game.
- Economic Environment and Government Measures: The German government implemented support measures that helped stabilize businesses, temporarily reducing insolvency filings. By April 2023, many of these support mechanisms were still in place or being phased out gradually.
- Post-Pandemic Recovery and Supply Chain Normalization: The gradual normalization of supply chains and the rebound in economic activity likely helped some companies recover, reducing immediate pressure on those at risk.
- Sector-Specific Pressures: Certain sectors, like transport and logistics, faced additional pressures due to external factors like toll increases, fuel prices, and operational costs. However, these sectoral spikes are more pronounced in 2024–2025 and may not have been as evident in April 2023.
- Lender Flexibility and Debt Restructuring: Companies secured new financing or debt restructuring deals, improving liquidity and delaying insolvency filings.
- Although the rate of increase in company insolvencies slowed down in April, the actual number of insolvencies for the month of February increased only by 15.9% compared to the previous year, with approximately 2068 regular insolvencies and creditors' claims amounting to around nine billion euros.
- The highest number of insolvencies was reported in sectors such as transport and warehousing, other services, and the hotel and restaurant industry, with factors like sluggish demand, high uncertainties, and high burdens eroding the profitability of companies.
- While the specific slowdown in the rate of increase in April insolvencies is not directly covered in recent data, ongoing government support, improving economic conditions, and the gradual exhaustion of early pandemic-induced pressures might have contributed to this trend.
- Only time will tell if the improvement in company financial health will continue, with stakeholders monitoring bankruptcy filings closely and looking for alternative methods of communication such as WhatsApp to stay informed about business developments and potential risk factors.
