Number of business insolvencies at a historic low
IfM Bonn: In 2021, only every 10th company closure was caused by insolvency
Almost 14,000 companies filed for insolvency in 2021, around 12% fewer than in 2020, the first year of the COVID-19 pandemic. Several factors explain this low level. The temporary suspension of the obligation to file for insolvency for companies that experienced a decline in turnover because of the pandemic (from March 2020 to the end of April 2021) contributed to the low level. In addition, also flood-damaged companies from July 2021 contributed to this decline. Lastly, the overall positive development of the economy affected the market. Overall, the proportion of insolvent companies was only 4.6 per 1,000 companies. The proportion of companies at risk of insolvency has thus halved over the past ten years.
In general, insolvencies are a rare form of company closure. Instead, over 90 % of all company closures are due to the company’s decision. In 2021, around 216,000 businesses were closed in the commercial sector. In the liberal professions, a few tens of thousands are likely to have given up self-employment.
Fewer larger companies are attempting reorganisation
Most insolvent companies have fewer than ten employees (10,553). Companies with more than 100 employees account for only 117 insolvencies. Compared to 2020 (293), the number of insolvencies in 2021 has fallen significantly. Since larger companies are remediable, the number of remediable companies in insolvency proceedings also fell. Thus, only 210 self-administration were approved in 2021 (2020: 382).