The risk of insolvency for companies has risen significantly as a result of the sharp rise in energy costs.
(Photo: dpa)
Berlin The federal government is taking precautions to prevent a possible wave of insolvencies among companies. “For this purpose, a temporary simplification of the obligation to file for insolvency due to over-indebtedness should be introduced,” a spokesman for the Federal Ministry of Justice told the Handelsblatt. This does not apply to companies that are already insolvent.
“Companies that are fundamentally healthy and able to survive under the changed framework conditions in the long term would benefit from the change in insolvency law,” said the spokesman. “They should gain time to adapt their business models.”
The background to this is the skyrocketing energy and raw material costs. According to a study by the industry association BDI published on Wednesday, the high prices are becoming a question of survival for more and more medium-sized companies.
Specifically, the ministry of department head Marco Buschmann (FDP) wants to shorten the forecast period for the overindebtedness check. The economic situation of a company is assessed according to the so-called “going concern prognosis”. A decision is then made as to whether the company can be continued or restructured or whether an application for insolvency must be filed.
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A company is currently considered to be over-indebted if its continued existence over a period of one year is “no longer predominantly probable”. “With the current market conditions and uncertain developments, however, such a forecast is associated with particular difficulties even for healthy companies,” said the ministry spokesman.
Restructuring experts advocate insolvency protection
Therefore, this period is now to be shortened to four months. “This change would exempt over-indebted companies from the obligation to file an application for over-indebtedness if their continued existence over the shortened forecast period is sufficiently probable.”
>> Also read here: Experts are warning of an increase in the number of private bankruptcies due to high energy prices
In the third relief package planned by the traffic light coalition, relief for companies in insolvency law is already provided. According to the ministry spokesman, the changes are now to be implemented “quickly”.
The federal government is thus complying with a request from the Society for Restructuring (Turnaround Management Association, TMA). Several TMA board members had already approached Justice Minister Buschmann a few months ago and suggested shortening the continuation prognosis – albeit down to three months.
A shortening of the forecast period would be suitable to achieve the primary goal of avoiding unnecessary and economically damaging insolvencies of German companies in the current market environment, according to the letter reported by the “Börsenzeitung”.
Crafts Association ZDH: “Every day we receive emergency calls from companies”
According to the Halle Institute for Economic Research (IWH), the number of company bankruptcies is currently still stable. “Despite the energy crisis, supply chain problems and the gradual phasing out of Corona aid, the insolvency situation is still pleasingly robust,” said IWH specialist Steffen Müller. But the burdens on the companies would increase again significantly. These included the increase in the minimum wage to twelve euros in October, the turnaround in interest rates initiated by the European Central Bank (ECB) and further expected increases in energy prices.
According to the ZDH industry association, the economic situation in the skilled trades has already deteriorated considerably. “In the trades, a wave of insolvencies is rolling towards us because of the energy crisis,” said ZDH President Hans Peter Wollseifer of the “Rheinische Post”. “Every day we receive emergency calls from companies that are about to shut down production because they can no longer pay the enormously increased energy bills.”
The dynamics of bankruptcies are “much worse than in the peak phases of the corona pandemic”. According to his impression, the federal government does not have this on the screen at all. The state would now have to support particularly affected, energy-intensive companies directly with hardship aid.
The Ministry of Economic Affairs warns of the danger of “silent operational tasks”. Insolvencies are not the sole measure – these procedures served the purpose of maintaining businesses. However, businesses could also simply be closed without filing for bankruptcy because they were no longer worthwhile due to the high costs. This is a serious problem, especially for small and medium-sized companies.
More: Why German companies are now warning of deindustrialization.