The number of major bankruptcies in Germany rose by 9% in the first 42 months of this year. The average loss item also increased. In 81% of the cases, it was much higher than in the same period last year. The sectors with the most major bankruptcies are the retail trade, the automotive sector, the service sector, but also the metal, textile and energy sector. This is evident from research by credit insurer Euler Hermes.

According to the researchers, the curtain fell for 9 large companies in the first 27 months (annual turnover higher than € 50 million). Well-known examples are Loewe, Kettler, Beate, Schuhpark Fascies, wind energy company Senvion, car supplier Eisenmann, book wholesaler Koch, Neff & Volkmar (KNV), the airline company Germania and fashion company Gerry Weber.

Acute money shortage

Walter Toemen, director of Risk at Euler Hermes Nederland, states that the effects for suppliers in particular are often dramatic. 

“With reputable large customers, companies think they are safe. They are therefore willing to accept far-reaching payment terms. Periods from 60 to 120 days. These are often large amounts. That makes them vulnerable. If such a large customer goes bankrupt, they will face acute financial difficulties. Entire branches can be affected by this. When things go wrong with large companies, things often go fast. A number of smaller suppliers in particular are therefore falling over. ”

Bankruptcies will increase in late 2019 and early 2020

If we look at the general bankruptcy figures in Germany, there is hardly any deterioration in the number in the first 9 months. 

“We think that the increase will be visible from the last quarter of 2019 at the beginning of 2020. It is clear that the German economy is ailing. New major bankruptcies seem inevitable. The malaise will slowly but surely also become visible in the bankruptcy figures in the SME segment. We therefore expect a further percentage increase for the coming year, ”says Toemen.

Germany is on the brink of recession. Whether the country actually falls over this recession edge is difficult to say, according to Toemen. 

“The German economy is mainly driven by higher consumer spending. The labor market is strong, construction is doing well and exports are also reasonably stable. There is still no recovery in the industry. Nor is the threat of Brexit and the trade war doing good to the German economy. So what it ends up on balance is difficult to say. It is clear that the resilience does not come from the companies. They are still consuming their buffers. ”

According to Toemen, the increase in major bankruptcies, such as in Germany, is also visible in other countries.

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