Wolfgang Weber-Thedy advises companies “in special situations”, which often means insolvencies. Karstadt, and most recently Orsay, are among his cases. In his opinion, the fact that there are no bankruptcies in Germany is mainly due to state aid. He doesn’t like that.
Wirtschaftskurier: Mr. Weber-Thedy, the economy in Germany is in crisis. No staff, high energy costs and high inflation rates are causing her problems. Still, she holds up well. The number of insolvencies is at a consistently low level. How does that fit together?
Wolfang Weber-Thedy: This is mainly due to the framework conditions set by German politics. Anyone who provides 200 billion euros in aid to subsidize energy prices changes the starting position significantly. Others don’t do that, which can be seen from the respective wave of insolvencies. In Switzerland it has so far increased by 28 percent and in Austria by almost 100 percent. The state interventionism is just not that developed there.
It sounds as if you don’t find such state aid to survive so great.
Weber-Thedy: I don’t think so either. From an overall economic perspective, I believe that it is not a good idea if companies only survive thanks to subsidies and do not make room for something new. The German government is taking a very situational approach. You should actually consider: How do we smooth the wave of insolvencies? Instead, Berlin asks itself: How do we prevent the wave? This reduces the pressure on companies to change. I wonder how long an economy can afford that.
Do other people do it differently?
Weber-Thedy: Sure. Take Switzerland, for example: the wave of insolvencies is rolling there. This also has to do with the fact that corona aid has now expired and has to be repaid. As a result, companies have to come out as zombies and shut down. In the meantime, however, start-ups are increasing there again. This is the best indication that the economy is rejuvenating. And it’s not a problem in view of the job market, where older people now also have good opportunities.
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In Germany, on the other hand, there is the 200 billion boom. This is unique in Europe and makes a significant contribution to keeping insolvencies low. But that won’t go on forever, and at some point there will be an increase in insolvencies.
that we fear…
Weber-Thedy: … for no reason. German insolvency law is very restructuring-friendly. Companies don’t necessarily cease to exist when they go bankrupt. It’s often not the end, but a new beginning and that’s a good thing. But the state’s what-ever-it-takes attitude is all the worse. Mario Draghi used this slogan to save countries from bankruptcy, but their economic performance has not improved.
The traffic light government is still willing to rescue companies directly or to suspend the obligation to file for insolvency. It is no longer a question of over-indebtedness, but of sheer insolvency. The result is zombie companies that at some point simply collapse under their interest or debt burdens.
In which industries do you see this?
Weber-Thedy: In logistics, with energy suppliers, in the construction industry, in food production, in retail. Galeria is such a case: The zombie is standing naked in front of you, now that no further grants are flowing and the management has completely sunk the unsecured loans of the Economic Stabilization Fund in the amount of 680 million euros. The most spectacular example is of course Uniper. Without the planned nationalization, that would be a super bankruptcy.
With a chain reaction.
Weber-Thedy: I’m not saying that you don’t have to do it in that case. A one-off intervention may be fine, but if it prevents the renewal of the market economy, then no.
Some companies just close. Without bankruptcy and without debt.
Weber-Thedy: Yes, that applies to the little ones. As a rule, they are not covered by the state as generously as the big ones. And then the bakery, the laundry or the transport company close without much ado.
Do the big ones have better luck?
Weber-Thedy: Sometimes a new donor can be found there. But the longer companies wait to file for bankruptcy, the more difficult it will ultimately be to find an investor. The politicians that support this with their anti-bankruptcy bazookas don’t think very long-term.
The article “”Galeria Karstadt Kaufhof is such a case: The zombie stands naked in front of you”” comes from WirtschaftsKurier.