33 German companies with sales of at least 20 million euros have filed for bankruptcy in the past three months. That is 74 percent more than in the same period last year. This means that there are already more major insolvencies than in the whole of 2021.
While BMW, Mercedes-Benz and Volkswagen are making billions in profits this year, Dr. Tailor in Kronach in north-eastern Bavaria dark. At the beginning of September, the supplier had to file for bankruptcy. Ventilation systems, panels, center consoles and storage systems for the interior of the car are manufactured here, but production has been halted again and again since the corona pandemic. Certain components could not always be delivered, the high prices for raw materials and energy are depressing the balance sheet. Although the company’s management presented a restructuring plan at the beginning of the year, the money ran out at the beginning of September. With the bankruptcy, an investor should now be found.
dr Schneider, with its annual turnover of 431 million euros and 4,500 employees, is the largest corporate insolvency that Germany has experienced in the third quarter. Overall, the number of major insolvencies of companies with at least 20 million euros in sales increased significantly. There were 33 registrations between July and September. That is 74 percent more than in the same period last year. However, no trend can be derived from this alone. While 33 major insolvencies were also received by the district courts in the first quarter of 2022, there were only 19 between April and June – a roller coaster ride.
“The increase now is to be expected, but it is not as high as some people expected at the beginning of the year,” says Jonas Eckhardt. He analyzes the major insolvencies for the management consultancy Falkensteg once a quarter. He expects around 130 major bankruptcies by the end of the year. That would be 71 percent more than in the previous year, but would remain well below the record value of 2020. In the first year of Corona, 181 large companies filed for bankruptcy. Compared to the last year before Corona, 2019, the number of major insolvencies would only increase slightly this year.
As in the previous year, the state is making sure that bankruptcies do not rise too far. At that time it was above all the suspension of the obligation to file for insolvency that slowed down the wave of bankruptcies, this time it is state aid measures via the relief packages. In the coming year, the state will again help companies with gas and electricity price brakes. This is a curse and a blessing at the same time. On the one hand, state aid prevents companies from slipping into insolvency that are only in trouble due to external circumstances such as the pandemic or the war in Ukraine. On the other hand, “due to the assistance, the so-called zombie companies have increased significantly,” says Eckhardt.
Zombie companies are those that would be insolvent even without an external crisis and are only kept alive by government aid. The economic problem here: zombie companies with no real chance of survival bind workers who could work more productively in healthy companies. “Recently, resources have also included the energy consumed by these companies without real economic added value,” says Eckhardt.
dr Schneider will almost certainly not belong to this category of companies. Insolvency administrator Joachim Exner sees good opportunities to restructure the car supplier. Either an external investor would have to step in or the creditors would have to agree to an insolvency plan. While the Bavarian company is undergoing regular insolvency, the next three largest insolvency cases use the protective shield procedure. This is applicable when a company can foresee insolvency, but it has not yet occurred. In this case, the company may look for the insolvency administrator itself and draw up an insolvency plan.
The largest protective shield cases in this quarter include the shoe retail chain Ludwig Görtz (198.8 million euros in sales), the mechanical engineering company Dücker Group (90 million euros) and the retail chain SuperBioMarkt (81 million euros in sales).
Broken down by industry, there is no clear leader among the major insolvencies this quarter. Auto suppliers filed for seven bankruptcies, followed by machine builders and companies from the food industry (5 each), metal and plastics companies (4 each).
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