BERLIN, July 9 (Xinhua) -- The number of insolvencies among large German companies surged 41 percent to 162 in the first half of 2024, according to an analysis by management consultancy Falkensteg published on Tuesday.
At the same time, the success rate of restructuring attempts by companies with liquidity issues that have a turnover of more than 10 million euros (10.8 million U.S. dollars) fell significantly, the study shows.
Out of 96 cases, 40 resulted in a business closure or insolvency, an increase of 43 percent compared to the same period last year. In 2023, only 28 companies had to close, while 67 were given a second chance.
"The effects of inflation and the high interest rates of the last two years are clearly reflected in the current insolvency landscape," Falkensteg said.
Automotive suppliers and mechanical engineering companies have been particularly affected by business closures. In these industries, the probability of a positive outcome after an insolvency filing is far below the average.
In addition, Germany's automotive suppliers are "alarmed" because the transition to electric vehicles and resulting sales are not developing as hoped. As a result, the segment could "turn from a growth opportunity into a financial risk."
"Rescuing companies from insolvency is becoming increasingly complex," said Jonas Eckhardt, partner at Falkensteg. High interest rates are making the acquisition of insolvent companies more expensive, he said, as "uncertain sales due to the general economic situation are deterring potential investors."
While the rise in insolvencies among large companies has been driven by negative effects from the COVID-19 pandemic, Germany's stuttering economic engine, as well as geopolitical tensions are further worsening the situation, Falkensteg said. (1 euro = 1.08 U.S. dollar) ■
