At first glance, German companies seem to be doing well.

According to data from the business data service provider Creditreform, the number of corporate insolvencies fell by more than 10 percent to 14,300 in 2021 and has thus reached a lower level than ever since the introduction of the insolvency law in 1999.

Mark Fehr

Editor in business.

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Overall, however, the number of bankruptcies in Germany increased suddenly in 2021. It rose by almost 60 percent to 122,100. The reason is the almost explosive increase in consumer bankruptcies by a good 80 percent. According to the head of economic research at Creditreform, Patrick-Ludwig Hantzsch, this increase is primarily due to a catch-up effect. Because since October 2020 there has been a more favorable regulation with a shorter residual debt discharge for personal bankruptcies. According to Hantzsch, many consumers have therefore waited before filing for bankruptcy and only filed it in 2021.

However, corporate bankruptcies are also likely to be hidden in the number of consumer bankruptcies.

The self-employed can now choose whether they want to initiate corporate insolvency proceedings or consumer insolvency proceedings in the event of bankruptcy.

Economic aid is misleading about the actual situation

According to Creditreform, the record-low number of corporate bankruptcies must not hide the fact that the economy is suffering severely from the corona pandemic.

Many companies only stay afloat thanks to massive government economic aid.

You can take advantage of liquidity assistance or apply for short-time working allowance, which is repeatedly extended, from the Federal Employment Agency for your employees.

However, government economic aid cannot improve the actual condition of companies.

After all, according to Hantzsch, they have to repay the KfW loans at some point.

The increasing debt reduces the creditworthiness of the companies, i.e. their creditworthiness. 

According to Hatzsch, the insolvency statistics no longer reflect the true state of the company.

The state aid would also mean that weak companies remain in the market.

"If you save every company, you will not save the economy," said Creditreform economic researcher Hantzsch on the occasion of the presentation of the bankruptcy figures in Frankfurt.

It is noteworthy that the extent of bankruptcy claims has increased despite the lower number of corporate bankruptcies.

Creditreform anticipates total damage of 54 billion euros in 2021 after 42.6 billion euros in the previous year.

The numbers come from the claims of creditors at the time of filing for bankruptcy.

On average, there is a loss of 4 million euros per insolvency case.

In Germany, the insolvency rate is usually very low.

In the event of bankruptcy, creditors only get 3 to 4 percent of their money back on average.