The opening of collective proceedings before commercial courts increased by 66% in the year between July 1 and October 31, the National Council of Commercial Court Registers said on Tuesday. Business failure rates, which fell sharply during the Covid-19 crisis thanks to government support measures, have not yet returned to their pre-crisis levels.
The number of companies in trouble before the commercial courts has thus risen to 12,059 in the past four months, compared to more than 50,000 failures a year before the health crisis. The National Board of Registrars, which publishes its barometer with the Xerfi Institute, states that “economic decline is now certain“And in the conditions of inflation and the weakness of the euro, which reduces purchasing power and weakens consumption.”companies face sluggish domestic demand with no opportunity for international capture“.
There are significant differences between sectors and geographical areas. The opening of insolvency proceedings during that period increased by 110% in Haute-de-France or even 90% in Auvergne-Rhône-Alpes, while their growth was limited to 53% in Ile-de-France.
Accommodation and food establishments were the most affected
At a sectoral level, the accommodation and food sectors were the hardest hit with a 124% increase in insolvencies, although starting from a particularly low level, this sector has been largely protected by public funds during the health crisis. Industrial and extractive industry grew by 81%, financial and insurance activities by 78%, trade by 73%. The sectors least affected by the recovery are agriculture, forestry and fishing (+20%) and real estate (+35%).
Still, during the same period, collective proceedings brought by commercial courts accounted for 77.5% direct liquidations, 20% compensation and 2.5% protective proceedings. In addition, the number of voluntary radiations increased by 8% during the year, and their share increased to almost half of the total radiations.
“With government help, unintended consequences have emerged, allowing executives of already fragile companies to exit more favorably– explains the National Council of Clerks. About 50,000 voluntary exposures were reported in four months. Finally, 22% of all write-offs are young companies created since 2020, most of them in home delivery services and remote sales.
Source: Le Figaro
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