Large parts of the economy have been at a standstill since mid-March due to coronavirus restrictions. Thanks to measures taken by the federal and state governments, the feared wave of bankruptcies has so far been avoided. However, this could still change.
As recently as February 2020, the outlook for the German economy was still good. According to the Federal Statistical Office (Destatis), there were 1,529 corporate insolvencies nationwide in that month, which was still unaffected by the coronavirus crisis. This was 3.2 percent fewer than in February 2019. The local courts estimated the expected creditors' claims from filed corporate insolvencies for February 2020 at just under €1 billion. In February 2019, they were twice as high.
Trend for April 2020
Due to the restrictions in the Corona crisis, many companies are now in distress, as can be seen from the Insolvency trend According to the results of the Leibniz Institute for Economic Research Halle (IWH), 1,936 partnerships and corporations filed for insolvency in March and April of this year, the same number as in the same period last year.
Destatis is also releasing preliminary figures on standard insolvency proceedings in Germany for the first time. The number of proceedings actually opened increased by 1.6 percent in March 2020 compared to the same month last year. In April 2020, however, the number fell significantly by 13.4 percent. In a press release, the Federal Statistical Office knowledge:
"The economic crisis caused by the coronavirus pandemic and the measures taken to contain it is therefore not reflected in an increase in the number of insolvency proceedings opened in March and April. However, the absence of such an increase, or even a decline in the numbers as in April, is not surprising at this point in time."
Bankruptcies will increase
According to Destatis, the reasons for this are, on the one hand, the processing time between the application and the opening of standard insolvency proceedings. These are only included in the statistics after the court has made its decision on whether to open or dismiss proceedings. This processing time has also been extended due to the partially restricted operations of the relevant insolvency courts.
On the other hand, the Relief measures The Federal Government's decision is particularly effective through the temporary suspension of the obligation to file for insolvency, which initially applies until September 30, 2020. This provision stipulates that companies that would have to file for insolvency due to the effects of the coronavirus pandemic are exempt from the obligation to file for insolvency, provided they have a prospect of resolving their insolvency after the crisis.
If these companies are unable to restore their solvency, they would have to file for insolvency after this grace period. Thus, the IWH estimates that a sharp increase in insolvencies could still occur after the end of the statutory exemption.
