BERLIN, June 15 (Xinhua) — Despite the economic slump caused by the coronavirus pandemic, the number of corporate insolvencies in Germany fell by 8.2 percent year-on-year to 8,900 cases in the first half of 2020, credit agency Creditreform announced on Monday.
“As a seismograph of economic development, the insolvency situation has thus decoupled itself from the actual situation of German companies,” Creditreform noted.
The low number of insolvencies was due to governmental support measures during the COVID-19 crisis such as credits by the German development bank KfW, according to Creditreform.
As part of the state aid program, German companies can apply for funds from the special credit line provided by the government. Until last Friday, more than 61,000 applications for credits totaling more than 46.9 billion euros (52.8 billion U.S. dollars) had been received by KfW.
Creditor losses amounted to around 12.0 billion euros in the first half of the year, with each insolvency case costing creditors an average of more than 1.3 million euros, according to Creditreform. This was the highest figure in recent years and was linked to the increase in the number of major corporate bankruptcies.
“During the course of the financial crisis of 2008/2009 we also observed increasingly large firms filing for bankruptcy,” said Steffen Mueller, head of the department of structural change and productivity and bankruptcy research unit at Halle Institute for Economic Research (IWH) last week.
Beyond economic crises, IWH noted that large companies were generally in a better position than small companies to avoid insolvency through a timely implementation of restructuring measures.
“Ultimately, the coronavirus crisis and the bankruptcies associated with it will be visible in increased job losses even if the bankruptcy numbers stay moderate,” warned Mueller.
In order to mitigate the effects of the coronavirus crisis, the government had also temporarily suspended companies’ duty to file for insolvency until the end of September. Creditreform warned that the number of insolvency proceedings would increase “considerably” once the suspension expired.
“Such a wave of insolvencies could only be averted if the companies affected were able to overcome the consequences of the crisis by that time and stabilize themselves again,” Creditreform noted. Enditem