The International Monetary Fund has found that government support is keeping roughly one in ten German companies afloat that would otherwise have gone bust during the coronavirus pandemic, Reuters reported. In a report that on Tuesday laid bare the scale of economic damage masked by state aid, the Fund also warned that, once support was unwound, bankruptcy could soar, potentially weakening Germany’s banks. The analysis said the pandemic impact was worst for hotels and restaurants, where almost a third of loans could have gone unpaid without state relief.
Germany’s upper house of parliament called on Monday for Chancellor Angela Merkel’s government to extend a waiver on insolvency filings for firms hit by the coronavirus crisis, Reuters reported. The provision, which is due to expire at the end of the month, has helped reduce the number of bankruptcies in Europe’s largest economy through lockdown, with the Federal Statistics Office last week reporting a 31.9% year-on-year drop in October.
The local court of Aschaffenburg today approved the application of Adler Modemärkte AG and opened preliminary insolvency proceedings in self-administration pursuant to Section 270b (1), (2) of the German Insolvency Code, new version, according to a press release. Within the scope of the preliminary self-administration, the business operations of Adler Modemärkte AG shall be continued in their entirety and the company shall be restructured by means of an insolvency plan. The management board of the company will continue to have the power of administration and disposition.
The number of corporate bankruptcies in Germany experienced a “noticeable” increase compared with pre-pandemic levels at the end of last year, though not as bad as feared, Bloomberg News reported. It’s the first snapshot of the country’s regular insolvency trends following a temporary suspension of filing requirements as part of Germany’s pandemic support measures. In December, 921 partnerships and corporations in the country were reported as bankrupt, just under 30% higher than in the previous three months, according to a report by the IWH Halle Institute for Economic Research.
Germany wants to extend beyond January a freeze on insolvency rules put in place to avoid a wave of corporate bankruptcies due to the coronavirus pandemic, Justice Minister Christine Lambrecht told the Handelsblatt newspaper, Reuters reported. Last March, the government offered respite to companies that find themselves in financial trouble due to the pandemic by allowing them to delay filing for bankruptcy until the end of September.