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Corporate bankruptcies at their lowest since… 1986

2021-10-12T07:04:02.743Z

The number of business failures is expected to drop to around 28,000 this year, half as much as in a normal period before



The wall of corporate bankruptcies, which some feared with the pandemic, has not taken place.

Better, according to the Altares barometer on business failures, with only 5,300 bankruptcies in the third quarter, they are two times less important than in a normal period before the crisis.

Thus, compared to the third quarter of last year, these failures fell by 21%.

A resistance which is observed "in all regions and in almost all sectors", underlines Altares in Les Échos.

"The number of failures should remain contained below the threshold of 10,000, or even drop to around 8,000 in the last quarter," explains Thierry Millon, director of studies at Altares in the economic daily.

After falling by 38% in 2020, they would still be down by 13% in 2021 to around 28,000. Unheard of since 1986!

Fewer assignments from Urssafs

How to explain this good behavior?

The policy of "whatever the cost" with a panoply of aid and support for businesses has had an undeniable shock-absorbing effect in helping to preserve the economic base of businesses during this period of crisis.

Even in some sectors still affected, insolvencies fell by 46% in the hotel and catering industry, 21% in construction and 22% in retail.

Another element to take into consideration. Reorganization proceedings were frozen from the first confinement. In addition, the Urssafs are always relatively accommodating when a company has difficulty paying its contributions. “When a company cannot pay, they study the various possible solutions but they do not assign”, resumes Thierry Million in Les Échos. Assignments which represent a third of the procedures in normal times.

However, perhaps we should not claim victory too quickly.

During the summer, the number of procedures for small SMEs which have more fragile cash flow increased by 30% compared to the previous period.

At the same time, if the growth is back, it is uneven and some activities remain well below their normal activity level.

This is, for example, the case with automobile factories.

A 40% rebound in bankruptcies in 2022

For some, 2022 risks operating a serious catch-up in business failures.

Altares estimates that 5 to 8% of companies will not be able to initiate the repayment of guaranteed loans and will be forced to initiate recovery plans.

Euler Hermes has a pessimistic view with a 40% rebound in bankruptcies in France and 15% globally from next year.

This level of bankruptcies would however remain 4% lower than before the crisis.

Source: leparis

All business articles on 2021-10-12

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