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The number of bankruptcies continues to fall – at least still

The much feared wave of bankruptcies is still a long time coming: The latest statistics from October show that the number of bankruptcies has fallen again. But that doesn’t have to mean anything.

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Even in October 2020, there were significantly fewer bankruptcies than a year before, despite the economic upheaval in the Corona crisis. The Federal Statistical Office counted 1,084 cases in the month and thus almost a third (31.9 percent) fewer in the same month last year – although since October those companies that are no longer solvent have had to file for bankruptcy again. From January through October, the number of corporate insolvencies was 13,575, 15 percent below the figure for the same period last year.

The economic hardship of many companies due to the Corona crisis has not yet been reflected in an increase in reported corporate insolvencies, the Wiesbaden authority stated on Monday. The main reason is a special regulation during the pandemic: companies that became insolvent due to the Corona crisis were not obliged to file for bankruptcy between March and September 2020 inclusive. For cases of over-indebtedness, the legislature has extended this exception to the end of January 2021.

Significantly more corona bankruptcies expected for 2021

Economic researchers assume that by the time this exception rule finally expires, the number of bankruptcies due to the corona crisis is likely to skyrocket. This is also indicated in preliminary figures from the Federal Office.

According to the information, the number of regular bankruptcies opened in December was, as in the previous months of 2020, below the previous year’s figure (minus 9 percent). However, it rose by 18 percent compared to the previous month. “Together with an increase of five percent in November, this represents a departure from the previous course of steadily falling number of cases since the beginning of the corona pandemic.”

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