That is 35.8 percent more than in the previous year and the highest figure in 15 years, the Alpine Creditors Association (AKV Europa) announced in a press release on Monday. Compared to the same period last year, liabilities have increased ninefold to 11.5 billion euros. 2023 was already marked by major bankruptcies in the retail and real estate sectors. The AKV predicts around 7,000 insolvencies for 2024.
The majority of liabilities in the first half of the year were attributable to bankruptcies involving Signa founder Rene Benko, his private foundation and Signa companies. Only a fraction of the claims have been recognized so far. And the bankruptcy of the Austrian subsidiary of the US electric car manufacturer Fisker contributed around 1.5 billion euros to liabilities. However, the recognized liabilities have not yet been determined in the restructuring process with self-administration.
Rejections worrying
Although the number of bankruptcies has increased massively, the number of jobs at risk remained constant at 9,411 employees.
But the number of cases rejected also increased by 16.74 percent, to 1,311. The AKV is concerned regarding the rejections: “This development continues to show that many companies kept alive by state support measures do not even have free assets of 4,000 euros to cover the costs of formal insolvency proceedings,” the credit protection agency said. Overall, corporate insolvencies rose by 27.53 percent.
Consumption and investment restraint
The reasons for the high number of company bankruptcies: restraint in consumption and investment caused problems for many companies. High interest rates and a lack of demand for credit put a strain on new construction. Accordingly, the retail sector was affected by the current economic situation with 529 bankruptcies, followed by construction (493) and the catering industry with 356 registrations.
According to the AKV, it is positive that the proportion of self-applications has increased once more. For several years, the proportion of creditor applications rose, but now an opposite trend can be observed, the AKV further announced. The proportion of self-applications rose from 34.62 percent in 2022 to 44.33 percent.
However, there were large regional differences in the number of proceedings opened. The number of insolvency cases rose by 110.34 percent in Vorarlberg, by 60.81 percent in Upper Austria, by 60.78 percent in Burgenland and by 43.02 percent in Vienna.
1577 company bankruptcies ended
However, in the first half of the year, 1,577 corporate insolvencies were concluded. In 28.79 percent of cases, a restructuring plan was concluded, and in 6.53 percent, a payment plan was agreed. In around a third of the cases, debt relief proposals were accepted. And 27.46 percent of the insolvencies ended with a total loss for the creditors.
Since the forecasts of the Economic Forum (Wifo) and the Institute for Advanced Studies (IHS) predicted GDP growth of only 0.2 percent this year, the AKV expects 7,000 bankruptcies this year.
The situation is more positive for private bankruptcies: 4,600 cases were opened, 1.25 percent more than in the same period last year. However, the number of rejected applications fell by 0.91 percent to 434 cases. This means that there was only an increase of around one percent in the first half of the year, with 5,034 cases.
In Burgenland, Upper Austria, Carinthia and Vorarlberg, fewer people had to file for bankruptcy this time, while in the other federal states there was an increase. The average debt fell from 136,200 to 117,300. However, the average debt increases with age and is clearly gender-specific, the AKV also reported: while women have an average debt of 85,200 euros, men have 137,500 euros.
The head of the Upper Austria debt counseling service, Thomas Berghuber, talks regarding average debts, private bankruptcies, interest rates of 22 percent and why debt is still a taboo subject in Austria.
