Corporate insolvencies are on the rise again

According to statistics published in mid-April by Altares, a company specializing in business information and counting all entities (companies, sole traders, liberal professions, associations) that have been the subject of collective proceedings (guarantee, receivership and liquidation) in France , The number of corporate insolvencies increased by almost 35% in the first quarter of 2022 compared to the first three months of 2021 (when it was very low), but remains below the level of the first quarter of 2020 (where it pre-crisis level). This increase, which started in November 2021, reflects the beginning of a gradual return to normal as business support measures expire.

Nearly 10,000 corporate bankruptcies

Nearly 10,000 insolvency proceedings were opened this first quarter. A number that is close to the number recorded in the same period of 2020 (10,900), but significantly lower than that of 2018 or 2019 (about 14,000). If all areas are affected, Ile-de-France and Corsica are the regions that offer the best resistance.

With 2,188 judgments handed down, the receivership proceedings in the first quarter of 2022 increased by 46.6% compared to the first three months of 2021. With 7,564 judgments handed down, the liquidations recorded an increase of 31.7%. And the 220 registered indemnification proceedings represent an increase of 29.4% (but barely more than 2% of all collective proceedings).

It is the companies founded less than five years ago, and in particular those created during or just before the crisis, that are most affected by this wave of failures, especially in the hospitality and general food industry. While SMEs with at least 50 employees are doing well, with fairly stable failure rates, the number of proceedings targeting small SMEs (10 to 49 employees) has exceeded pre-crisis levels – structures very much present in the construction, trade and industry .

No sector is spared

All sectors are being affected by this increase in corporate insolvencies, but the consumer-oriented activities (hospitality, commerce, personal services, etc.) are the most affected, sometimes even above the 2020 level. B2B activities are holding up better.

In the retail sector, the situation is clearly deteriorating in retail (especially in general food), as well as in e-commerce. Backlogs are also increasing in the clothing trade, sale and repair of vehicles. In the traditional catering industry, the number of disruptions is approaching the level of the first quarter of 2020, with a sharp increase for drinking establishments.

On the personal services side, the situation is deteriorating sharply in hairdressing and beauty salons, where failures exceed pre-crisis levels. Activities related to sports or education, including driving schools and adult education, are returning to levels close to pre-crisis levels. Business services are holding up better. IT services and software publishing suffered the most deterioration, while security and cleaning activities showed a slight decline in procedures.

In construction, the shell withstands better (thanks to the general masonry) than the second work. In the manufacturing industry, metallurgy mechanics defend themselves best. In the transport sector, the most pronounced deterioration relates to road freight. Finally, the agricultural sector has returned to pre-crisis insolvencies.

After the health crisis, the war in Ukraine

While the recovery in economic activity at the end of 2021 heralded a real rebound in 2022 despite the fifth wave of Covid-19, the war in Ukraine has since obscured forecasts due to its impact on household morale and the business environment. Return of inflation, supply difficulties, increase in energy prices, risks of shortages of certain materials…

The resilience plan recently introduced by the government should address the difficulties encountered by companies directly affected by the war and by companies particularly disadvantaged by the rise in energy prices. In this context, “the upward trajectory of corporate insolvencies should continue but at this stage without suggesting a wave of foreclosures as companies still have cash“, estimates Altares study director, Thierry Million.

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