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Surprisingly, despite the biggest economic crisis since the world war, this year’s corporate insolvencies have the fewest bankruptcies since 1990. At a press conference, KSV1870 explained why this was the case and how companies view this year and the future. next. In addition, the association asks the federal government to put an end to the “principle of the watering can” and that companies are not artificially left alive.
AUSTRIA. These statistics do not reflect the real state of the economy. Because with an overall decrease of almost minus 40 percent, there were only 3,000 bad debts in 2020: until the first lockdown, bad debt figures were only 5 percent lower than in 2019; after the first lockdown at the end of the year, the insolvency figures were cut in half. decreased, resulting in a decrease of nearly 40 percent for the entire year. This is the result of an analysis of KSV 1870, which the debtors’ association published to journalists on Wednesday.
The number of affected employees remained relatively the same (-5.2%), while liabilities amounted to almost three billion euros.
The biggest economic crisis in decades
The paradoxical picture of lower insolvency figures during one of the country’s biggest economic crises is maintained due to artificial intervention measures by the federal government. “For a healthy economy, it is important that insolvency law can be used in accordance with the rules,” said Karl-Heinz Götze, director of insolvency at KSV1870. If you look at the numbers from January to mid-March this year, this twisted situation clearly started with the first shutdown and ordinances that went into effect at that time.
Liabilities increased significantly despite the decrease in bad debt
Statistics show that compared to the previous year, liabilities increased by around 75 percent this year to almost three billion euros. Without the bankruptcy of Commerzialbank, there would still be around 2.2 billion euros. This means that the damage suffered by around 40,000 creditors (excluding this large bankruptcy) due to an increase in large bankruptcies is still a 28 percent advantage, despite the huge decrease in bankruptcies. In addition, the tax office and the health insurance company were urged to file for bankruptcy. Otherwise, these make up about half.
Bankruptcies in western Austria fell more drastically
The surprising thing about bankruptcies is the vast difference between the western and eastern federal states. Insolvency figures in Tyrol (-49.8%), Salzburg (-49.2%) and Upper Austria (-49.8%) have fallen significantly more than in Lower Austria (-34.8%) and Styria (-33.8%). “This is due to the fact that there are many more small and medium-sized companies in western Austria that could benefit more from the subsidies,” Götze told reporters.
The decline in bad debts is reflected in all sectors. The branch with the most bankruptcies is business services with a share of 30.3 percent (518 cases), followed by the construction industry with 29.9 percent (510 cases) and the hotel industry with 25, 1 percent (428 cases). Here too, it is clear that, thanks to government support, far fewer cases have been reported than expected. The largest insolvencies after Commerzialbank in Burgenland (EUR 800 million) were those of the Anglo Austrian Bank (Vienna, EUR 300 million) and the PELE Foundation in Vienna (EUR 127.3 million). The Vapiano group of companies declared bankruptcy with 55.6 million euros.
Survey among companies shows a positive outlook
After the collapse of economic output, which had been constant for years, almost overnight, the brief relaxation came to a sudden halt due to the renewed lockdown. However, more than half (52 percent) of companies rate the current business situation as “very good” or “good”, as shown by the “Austrian Business QuickCheck” survey conducted by KSV1870 in early December: early December September was only 44%.
An initial economic recovery is not expected until the second half of 2021 at the earliest. “On the positive side, the glass for Austrian economics is still half full. We have to maintain this momentum so that companies can fully take off again in 2021, ”says Ricardo-José Vybiral, member of the board of KSV1870 Holding AG.
During a quarter, 2. The blockade had fewer consequences
The survey results also show that the economic consequences of the second blockade are “at least no more negative than those of the first.” Thirty percent of those surveyed rate the economic consequences of both closures as “equally negative.” For a quarter, the new blockade had fewer consequences, while 17 percent indicated that neither of the two blockades had a financial impact on them. In contrast, 16 percent are currently struggling with more serious economic fallout than they were in the spring. Vybiral justifies the stronger consequences in the first lockdown with the fact that many entrepreneurs only reacted later and switched to a digital agenda, which was helpful to many in the second lockdown.
Relaxation is expected in the third quarter of 2021 at the earliest
Due to the constant ups and downs, the biggest fear among companies is the “uncertainty about when the crown crisis will end” (52%), followed by the risk of employees becoming infected with Covid-19 (40%). Looking ahead, more than half of the companies surveyed assume that there will be an economic recovery in the next year, but most do not expect it until the third quarter (27%).
Skilled worker shortage as the biggest problem of the future
Skilled worker shortages (64%) and high level of bureaucracy (58%) are seen as future challenges. Other headache problems are “aging society” (46%), unemployment (45%), and cyber attacks.
(38%). Furthermore, digitization (34%) is considered essential.
Experts Against Bankruptcy “Procrastination” and Dumping Battles
Despite the massive interference in our economic life in recent months, there has been a dramatic delay in bankruptcy, according to experts. Companies that are artificially kept alive now offer their services at dumped prices, dragging healthy companies into the abyss as they must now also offer them at discounted prices. “In the end we will see more bankruptcies and, in addition, liquidations in which restructuring will be impossible due to lack of valuable assets.” Therefore, the KSV1870 expects a steady increase in bad debts of around 20-25 percent compared to 2019 from the second quarter of 2021, assuming no further relief measures will be taken by the federal government. Expert Tip: Businesses shouldn’t be afraid of filing for bankruptcy. “Due to our culture of avoiding bankruptcy and the accompanying embarrassment, many companies are hesitant to take this step,” Vybiral said.
Do not continue to pump according to the shower principle
Short-term jobs, emergency funds, guaranteed loans, fixed-cost subsidies and tax breaks: “The spring measures were important to not let the national economy sink into the abyss. It is obvious that companies that would not have survived even in a normal year of bankruptcy are artificially kept alive here. ”
It is now important for companies to recover independently and not proceed according to the “sprinkler principle,” Götze said. “In order to focus all energy on the urgently needed restart, it will be necessary to leave crisis actionism behind as soon as possible and return to sustainable economic activity, including a properly functioning insolvency system,” concluded Vybiral and Götze. Companies that are doing it wrong are, moreover, throwing others to the ground by dumping prices.
In December 2020, KSV1870 asked some 600 companies about the direct effects of the Corona crisis on their operations as part of the third Austrian business QuickCheck.
Fewer personal bankruptcies in 2020 despite the crisis
