German insolvencies fall further, new cases also ease
Reuters
Published May 11, 2021 02:21AM ET
Updated May 11, 2021 03:06AM ET
BERLIN (Reuters) -Corporate insolvencies in Germany fell by 21.8% on the year in February, the Federal Statistics Office said on Tuesday, continuing a downtrend since the introduction of a waiver at the start of the pandemic.
Germany let firms that were struggling with the crisis delay filing for bankruptcy from March last year - though critics said the policy would only end up propping up "zombie companies" with no viable future.
Insolvencies duly fell, hitting their lowest level since 1999 last year. But since October, Berlin has phased out the scheme. This year only firms awaiting state aid provided since November were exempt from filing - until this month.
The Statistics Office said the February figures meant "that the economic problems of many businesses due to the coronavirus crisis were not yet reflected by an increase in reported business insolvencies."
Tuesday's data release also showed a let-up in insolvencies making their way through the legal system in Europe's largest economy after a sharp increase in recent months.
The number of new insolvency proceedings, which give an indication of the future path of actual insolvencies, fell 17% in April from the prior month, provisional data showed. That followed a 37% increase in March.
The European Union's top economic watchdog said last month EU governments must step in to avert a wave of insolvencies by healthy companies that are struggling due to the pandemic.
But local critics who say the fall in insolvencies over the past year is proof in itself the state has done more than enough and that excessive support risks impeding what economic liberals hail as "creative destruction", the term popularised in the 1940s by Austrian economist Joseph Schumpeter to describe unviable firms folding to make way for more dynamic newcomers.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.