Large corporate insolvencies hit record high in Germany
Construction and retail accounted for almost half of large insolvencies
The number of large insolvencies in Germany reached a record high in the first six months of 2024, rising by 37%, according to Allianz Trade.
The credit insurer said Germany recorded 40 large corporate failures at mid-year, making it the largest half-year figure since 2015. At the same time, large insolvencies represented €11.6bn in turnover at mid-year, which exceeds the full-year total for 2023.
Allianz Trade has predicted a total of 21,500 bankruptcies among German corporates of all sizes for the full year, which would be 21% higher following a similar rise of 22% in 2023.
“Bankruptcies in Germany are rising significantly, and this trend is likely to continue over the course of the year as the economy continues to struggle with the recession,” Allianz Trade said. The spike in insolvencies is only likely to “level off somewhat” in 2025, Allianz Trade said, anticipating a more moderate rise in insolvencies of 2% to 22,000 cases next year.
Milo Bogaerts, CEO of Allianz Trade in Germany, Austria and Switzerland, said when things go wrong, they go badly wrong. “Major bankruptcies often have a domino effect on many companies throughout the supply chain. It is not uncommon for them to be swept along and get caught up in the downward spiral, which in the worst case also ends in insolvency,” Bogaerts said.
Allianz Trade calculated that large company insolvencies, which expose suppliers to credit risk, during the first half of this year averaged a turnover of €290m, an increase of 85% on H1 2023.
Bogaerts said construction and retail accounted for almost half of large insolvencies in the first half, with some companies unable to meet repayments on Covid-19 loans or faced difficulty obtaining new loans and financing.
The fashion retail sector accounted for eight out of nine failures in the wider retail sector during the first half, Bogaerts said, with consumer-focused sectors feeling the pinch from a slowdown in consumer appetite. “Added to this are the continuing high container freight rates, which are causing concern for many companies in view of the upcoming Christmas business,” Bogaerts said.
