During the Covid-19 crisis, fragile companies were protected by government support measures.
Corporate insolvencies rose at a record pace this summer in France, where “the return to pre-Covid standards is accelerating”according to a study published this Monday by the specialized firm Altares. “With 8,950 open creditor contests between July 1 and September 30, the level of delinquency increased by 69% compared to the summer of 2021, a rate that has not been seen for 25 years”pointed out the firm that registers all the openings of procedures before the commercial courts.
More than 12 consecutive months, “The bar of 38,000 bankruptcy proceedings is exceeded for the first time since the summer of 2020”according to Altares, who adds that it is a “increase of 10,000 failures in a year, which however does not return France to the default levels of September 2019”before the health crisis, with 53,500 failures in one year.
The increase was particularly high for SMEs with 20 to 49 employees, whose number of defaults more than doubled in one year this summer to 186 open procedures, approaching the summer 2019 level of 193 procedures. By sectors, the increase exceeded 200% in fast food, reached 115% in online sales and 109% in clothing. The industry posted an 85% increase, to 688 defects, driven by food (297 defects, or +141%). The degradation is also very significant for hairdressers and beauty salons (+94%), while agriculture limits the increase in the number of failures to 11%.
About 75% of judicial settlements
By region, the accident rate of companies doubled in Hauts-de-France, which returned to a situation equivalent to that of 2019, while “the PACA region seems to hold up the best”, according to Altars. During the Covid-19 crisis, fragile companies had been protected by government support measures, such as the relief or facilitation of the payment of social security contributions and state-guaranteed loans (PGE) that supported their cash flow. .
Therefore, the loss rate seen in the third quarter of 2021 had been the lowest ever seen in 25 years. Last summer, almost three quarters of the procedures opened with the commercial courts were direct judicial liquidations, a rate higher than the one before the health crisis (68%). Judicial reorganizations represented 24% of the total, while safeguard procedures are still few, although their number (229) exceeds the pre-crisis level.