The Bankruptcy That Never Came – E24

The waves of bankruptcies announced for Norwegian companies and industry have not materialized so far. So far this year, by contrast, there have been 10 percent fewer bankruptcies compared to last year.

Is it due to the exemplary governance of the country’s elected representatives?

Have there been purely strategic initiatives to influence policy?

Or have the experts just been wrong?

And what do you think of the future now?

We have heard of some of the “doomsday prophets.”

– Have we seen a miracle?

– The miracle has probably happened, yes, and it is not only us who have lost it a bit. I was pretty sure that the crisis would affect the business community so there would be more bankruptcies, but I must admit that I was wrong in May.

When the crown crisis occurred, the government stopped filing for bankruptcy for a period of time. Combined with cash support and tax and fee deferrals, it contributed to very low bankruptcy numbers.

However, with June expenses such as vacation pay and VAT payments, Per Einar Ruud thought that the increase would come, but even then the trend was not reversed. And in August we received the most surprising numbers yet, says the credit economist.

Then the number of bankruptcies dropped by as much as 41 percent compared to the same period last year.

– We have stopped believing that there will be a record of bankruptcies this year, but I fear that there will be more bankruptcies during the fall now that the compensation scheme has ended, says Ruud.

– Why did you make a mistake?

– The compensation scheme should have a lot of credit. And then there is the industry that has more bankruptcies every year, about a quarter of the total, is construction. But it is a sector that has not felt so well the crisis, there has still been a lot of activity both on roads and in facilities.

Aandalen expected to see a ketchup effect in the number of bankruptcies in the coming weeks of June. Instead, according to Bisnode, we had the lowest bankruptcy numbers since 2012.

– Was it an incorrect warning call?

– He who lives will see, but he has surprised us. That week we expected it to continue to rise, but then the Storting decided on further tax and fee deferrals, says Aandalen.

– I think that if we look at this in hindsight, then the package of measures has proven to work better than expected. But I’m still afraid there is a backlog of bankruptcies waiting.

– So bankruptcy is coming?

– We are very confident that we will see an increase in the number of bankruptcies at some point, but it is difficult to predict exactly when. If the Tax Administration remains reluctant, it will take time, but when it tightens, there will be more bankruptcies. Maybe around New Years.

The second quarter has been bleak on various economic scales, but not in the number of bankruptcies.

Compared to the same period last year, it was rather a decrease of almost 30 percent.

Ole Hasven explains that the first phase of the corona epidemic was characterized by a lot of uncertainty.

– The bankruptcy figures so far are perhaps a sign that the crisis packages have worked, he says.

– And then it has been remarkable how quickly we have managed to change our habits and adopt digital solutions. We buy as much as before, only in slightly different patterns.

The reason it fell short of expectations is that the cash subsidy, VAT and tax deferrals, as well as the travel ban ensured the all-time shopping summer, Koefoed explains.

– In addition, not only the public sector, but also companies and individuals stopped raising money. There was probably no one who wanted to put what had been declared bankrupt to others during that period there.

On September 1, however, the compensation plan expired, the same date that the postponed deadline for paying VAT for the second period expired.

– Based on what I have received from the public sector signals, they will now recover their expired claims again. There is a large backlog of clerk bankruptcy estimates, so the statistics will likely stabilize.

To Oppen’s question about bankruptcies in the fitness industry, the answer so far this year is five. That’s one more than last year.

– I stick to what I said. The danger of bankruptcy is not over, they are actually vulnerable. We fear that it is now starting, and that the fall and winter will be very difficult, says Virke’s Training Director.

The highlights cited date from a period when gym closures were required and the accounts consisted almost exclusively of expenses.

Virke’s manager, Ivar Horneland Kristensen, points to the compensation scheme and then the reopening of the partnership as one reason why bankruptcies have been delayed until now.

– But the pandemic situation is not over. It’s too early to start summarizing now and say that the numbers so far are what they were, he says.

– Do you exaggerate your concerns about being heard and winning politics?

– We are very clear who we represent, but we are serious and we rely on the numbers we have from our members and their industries.

Since Dørum’s statement, three months have passed without us seeing any increase, quite the opposite.

– I mean the same now as then. Economic activity has dropped significantly, and if we go back in time, we see that this has led to more bankruptcies, says Dørum.

– When will the bankruptcies come?

– Neither then nor now did I want to propose numbers or dates. But if I have been pessimistic about others, they are from previous experiences, both from the 80s and from the financial crisis of 2008.

– In any case, there is no doubt that it is a difficult time for the Norwegian economy, we see it both in the unemployment figures, as in the activity and also in the NHO barometers themselves.

Through the crisis, NHO has conducted regular surveys among its member companies to chart how the business community views its own future prospects.

In March, one in three respondents said they feared bankruptcy. As of mid-August, the turnout was 12 percent.