Economics Minister Robert Habeck (Greens) was asked on Tuesday on the TV talk show “Maischberger” whether he believed in a wave of bankruptcies in winter. His answer: “No, I don’t. I can imagine that certain industries will simply stop producing for a while.”
A look at reality suggests, regardless of the extent to which Habeck is really familiar with the matter, that he could be wrong with part one of his answer: just a week has passed in September 2022 – and there are already two prominent insolvencies .
First it hit the toilet paper manufacturer Hakle, and then the shoe retailer Görtz with currently 1800 employees and 160 branches in Germany and Austria. “The war in Ukraine, with increased energy costs and high inflation, has led to considerable uncertainty among customers. The resulting reluctance to buy resulted in a significant drop in sales,” says a statement from the long-established Hamburg-based company, which was founded in 1875.
In order to adapt the cost structures to the changed market conditions, a consistent restructuring is necessary. And Görtz is now tackling this with so-called protective shield proceedings at the parent company and self-administered insolvency proceedings at the operating subsidiaries Görtz Retail and Görtz Logistik.
The management around Managing Director Frank Revermann and CFO Tobias Volgmann will remain in office, but will be assigned a restructuring expert to supervise. The well-known insolvency expert Sven-Holger Undritz from the law firm White has taken over the task of the so-called provisional administrator
Business operations at Görtz continue unchanged, all shops remain open. Wages and salaries are paid for three months by the Federal Employment Agency. From December, the company wants to be able to stand on its own two feet again. “Görtz is a strong and well-known brand that still has a lot of potential,” says Revermann and announces “a successful future” and “sustainable growth”.
Industry experts, however, are already expressing doubts. Especially since Görtz has not experienced turbulence for the first time. Sales have been falling sharply for several years – from 361 million euros in 2010 to just 199 million euros in 2020. And just last year the family business received a capital injection of 28 million euros from the Federal Economic Stabilization Fund (WSF) in have to claim.
And companies that are already struggling due to the Corona crisis are finding it particularly difficult in the current environment with high energy prices, supply chain problems and inflation and a lack of consumption, according to the credit agency Creditreform. “We expect the number of insolvencies to increase significantly in the coming months,” Patrik-Ludwig Hantzsch, Head of Economic Research at Creditreform, told WELT.
August that just ended was a harbinger of this. This shows the current insolvency trend of the Halle Institute for Economic Research (IWH). 718 company insolvencies are noted in the statistics, which is an increase of 26 percent compared to the previous year. “After a long period of low insolvency figures, a trend reversal has now set in,” says Steffen Müller, head of the IWH department for structural change and productivity and the insolvency research based there. In September, for example, he expects 25 percent more insolvencies, and according to the IWH leading indicators, the rate of increase in October will even be around a third compared to the same month last year.
The background is particularly sharply rising prices for important production factors: the Ukraine war, for example, led to significantly higher energy costs, the interruptions in international supply chains in turn are responsible for the rise in the price of many imported intermediate goods. In addition, the turnaround in interest rates announced by the European Central Bank (ECB) will increase companies’ refinancing costs. And the increase in the minimum wage from October will also put additional strain on companies’ finances.
“Many companies expect permanent cost increases that will make their business model unprofitable,” explains Müller. Therefore, the number of bankruptcies will now increase. And usually the IWH results deviate only slightly from the official figures, which are usually published with a two-month delay. The announcements of the German registration courts are evaluated for the insolvency trend, linked to the balance sheet figures of the companies concerned.
Because of the exploding gas prices, many companies are reaching their financial limits. Particularly energy-intensive companies groan under the gas surcharge. There is a risk of short-time work and even bankruptcies.
Source: WELT/ Leonie von Randow
Creditreform is similarly pessimistic. There is also talk of a trend reversal in corporate insolvencies. “The energy crisis will hit companies hard in the coming weeks and months,” explains expert Hantzsch. In addition, the general economic conditions had deteriorated significantly as a result of the war in Eastern Europe, the supply-side price increases and the beginning of a turnaround in interest rates.
“We can already see that the payment behavior between companies is suffering and that the number of debt collection mandates is increasing.” And Germany is still only at the beginning of an energy crisis, says Hantzsch. “There is still a lot to come.” Especially since the federal government’s latest 65 billion euro relief package is quite sobering, especially for medium-sized companies. “Banks have long been asking us about default risks in the coming months.”
According to Creditreform, Austria is currently a warning example. There, the number of corporate insolvencies in the first half of the year has skyrocketed by a good 121 percent to almost 2,500 procedures. The numbers are almost at the pre-Corona level, when there was no state aid and support measures that prevented bankruptcies. “The corona bubble is dissolving,” comments Gerhard Weinhofer, Managing Director of Creditreform Austria, on the rapid development. And several thousand other companies are at risk of failure, specifically around 5,700. That roughly corresponds to the number of “prevented insolvencies” during the pandemic years 2020 and 2021.
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