Bankruptcies: Significant decline in the horror month of April – avalanche from October!

The avalanche of insolvencies is rolling through the Corona crisis? Wrong. Through various laws, which are often well-intentioned and at first make sense, the crisis (our opinion) will later become much worse. Because problems are now optically hidden, postponed, added up, and later the whole extent of the problem becomes even more visible. This “shifting into the future and adding up” is particularly visible in the case of insolvencies.

Significant decline in corporate insolvencies

We had already discussed this issue a month ago for the first quarter. And today we have the official data for the Corona horror month of April. Everything except supermarkets and pharmacies really had to close. With 1,465 company bankruptcies in April, the number of registrations fell by 13.3 percent compared to April 2019! The economic hardship of many companies caused by the Corona crisis has thus far not been reflected in an increase in the number of reported corporate insolvencies, according to the statisticians.

The decisive factor here is that the German government decided in March at lightning speed to suspend the obligation for companies to file for insolvency from March to the end of September. So if a managing director of a GmbH sees that his shop is bankrupt, he should actually file for insolvency. In order not to make himself liable to prosecution, he would have to file for insolvency (insolvency delay). He is currently relieved of this burden. And he can continue to run his bankruptcy shop until the end of September without having to file for insolvency. We think: At the moment a lot of bankruptcies are being saved and postponed. From October, when the obligation to file for insolvency applies again, an avalanche will roll over the local courts.

Avalanche postponed?

Or will this avalanche again be optically postponed? Maybe by a few quarters into the future thanks to ever new state aid programs? It would be conceivable if only enough state money were distributed. Only yesterday the federal government announced that it would support small and medium-sized companies with 25 billion Euros in subsidies (no loans). But only until the end of August. The statisticians are already publishing data for the month of June as a preliminary indication. Applications for insolvency fell by 8.6 percent compared with June 2019. The chart shows the insolvency proceedings opened since 2008.

Chart zeigt rückläufige Insolvenzen in Deutschland

Consumer insolvencies also down significantly

And the consumer insolvencies? Surely many new unemployed and short-time workers as a result of this crisis should also mean that many people go into private insolvency? We suspect: Thanks to numerous state aid measures, this area too will only be postponed for a few months into the future. But in April, consumer bankruptcies are also clearly on the decline. In April, compared with April 2019, the figure was minus 40.1 percent (3,283 applications). The statisticians explain, quote:

This very large drop in the number of insolvency applications from consumers can be explained on the one hand by the limited operation of the competent insolvency courts during the Corona pandemic and the resulting longer processing time. On the other hand, consumers have postponed the date of their insolvency petition due to the corona pandemic.

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