Wave of bankruptcies only postponed

Initially, the results of our 17th Restructuring Barometer, whose panel survey was conducted from late July to early August 2020, painted a relatively optimistic picture: Although leading German economic research institutes for 2020 are expecting gross domestic product to plunge by 5.4 percent, the impact on bank balance sheets is still limited. So far, the number of bankruptcies is manageable.

But that is only one half of the picture: Many companies circumvented the first wave of the pandemic with the help of government support such as loans, short-time work benefits or the suspension of the obligation to file for insolvency. Many companies, however, will not survive the second wave. The Bundesbank, for example, assumes that more than 6,000 insolvency applications will be submitted each quarter in 2021. The specialists surveyed in our Restructuring Barometer also anticipate a rather gloomy near future: 88 percent fear an increase in restructuring cases over the next six months. This is the highest figure since the barometer was launched in 2012.

>>
Never before since the inception of the survey has the financing of crisis situations been regarded as being so challenging. Around 59 percent of those surveyed rate this topic as 'difficult' or 'very difficult' – representing an all-time high.<<

Georgiy Michailov,
Managing Partner at Struktur Management Partner

Great concern for intensive care patients

The respondents to the current Restructuring Barometer are particularly concerned about their "intensive care patients": More and more experts state that it has become increasingly difficult to relaunch companies on the markets as "cured" or at least stable. Only 15 percent of those surveyed stated that they had succeeded in this more frequently than in the past six months. The financing of restructuring cases is also more challenging than ever before: around 59 percent rate the current financing conditions as "difficult" to "very difficult".

What financiers are paying particular attention to

The logical consequence: the sharp uptick in the number of those who are particularly critical of new credit commitments. A total of 81 percent of the experts stated that they were much more critical of granting of new loans, at least in individual cases. In the spring, this figure still stood at 52 percent. The experts’ particular focus was the liquidity position and the order intake of potential borrowers.

However, there are no changes in the particularly endangered sectors: Automotive manufacturing and automotive suppliers as well as plant and mechanical engineering remain the particular problem areas of the financiers. An understandable assessment: Both the corona pandemic and (digital) transformation pressures are impacting these industries particularly severely.

Particular focus on these crisis indicators:

  • 65%
    Liquidity position
  • 57%
    Declining order intake
  • 39%
    Declines in earnings
  • 35%
    Declines in sales
  • 15%
    Short time work

These exogenous risks are currently the most feared:

    • 76%
      Impact of the coronavirus
      epidemic
    • 60%
      Digitization
    • 60%
      Weak growth in the euro zone
  • 48%
    Danger of global trade slump Protectionist tendencies
  • 36%
    Brexit
Considered "important"/"very important"
Source: Restructuring Barometer