Corporate insolvencies in Germany fall to lowest level since introduction of new insolvency regulations in 1999

The number of corporate insolvencies in Germany fell again in 2021. A total of 13,991 companies filed for insolvency last year. Corporate insolvencies thus decreased by 11.8% compared with the same period of the previous year (2020: 15,865 corporate insolvencies).

As a result of what is now the twelfth decrease in a row, corporate insolvencies in 2021 fell to a new low since the current insolvency code was introduced in 1999. When compared with the previous insolvency peak in 2003, when there were 39,320 corporate bankruptcies in Germany, insolvency cases in 2021 fell by just under two-thirds (-64.4%).

"In terms of insolvencies, 2021 continued to be influenced by special regulations," commented CRIF Germany Managing Director, Dr. Frank Schlein, on the current figures. This is because the suspension of the obligation for over-indebted companies to file for insolvency, in place until the end of 2020 as decided at the beginning of March 2020 due to the coronavirus pandemic, was further extended until the end of April 2021 for those companies where state aid, in effect since November 1, 2020, had not yet been paid. In addition, there were exemptions for companies that had suffered damage from heavy rain or flooding in the summer of 2021.

"The war in Ukraine will fundamentally change the geopolitical and economic context, especially in Europe. The German economy will suffer significant negative impacts. Sanctions against Russia, for example, will have negative consequences for supply chains and for the German economy, which relies heavily on exports. We therefore expect corporate insolvency figures to rise in 2022. Due to the dynamics involved, we are currently unable to assess the magnitude of the impact on insolvencies in Germany," says Schlein.

The losses caused by corporate insolvencies increased in 2021 despite the falling number of cases, with a total of €48.3 billion last year. Compared with the previous year, this is an increase of 9.5% (2020: €44.1 billion). On average, therefore, bad debt losses amount to just under €3.45 million per insolvency. The collapse of several economically significant companies are responsible for this sharp increase.

The highest concentration of insolvencies in 2021 was in Bremen, with 110 insolvencies per 10,000 companies. The national average was 46 bankruptcies per 10,000 companies. In addition to Bremen, Berlin (82 insolvencies per 10,000 companies), North Rhine-Westphalia (65), Saarland and Hamburg (57 each), Saxony-Anhalt (49) and Hesse (47) all ranked above this figure.

The fewest company bankruptcies in 2021 were in Brandenburg and Thuringia, with 31 insolvencies per 10,000 companies. Also in Bavaria, comparatively few companies had to file for insolvency (32).

Company insolvencies fell in all German states in 2021, most notably in Brandenburg (down 24.4%), Saxony-Anhalt (down 19%) and Rhineland-Palatinate (down 18.2%).