Insolvencies Climb Slightly: A Slim 3.3% Rise in Company Collapses
corporate insolvencies show a notable rise, indicating a deceleration
In a surprising twist, the number of company bankruptcies increased only marginally in April, according to the Federal Statistical Office in Wiesbaden. The rise, a mere 3.3 percent year-on-year, marks the second consecutive month with single-digit growth rates — a relief after several months of double-digit increases. But the German Chamber of Industry and Commerce warns, "We're not out of the woods just yet."
The statistics count applications for regular insolvency after a court ruling, meaning the actual time of application is frequently around three months earlier.
The figures for February, the most recent data available, showed an increase of 15.9 percent compared to the previous year, with 2,068 regular insolvencies and claims of creditors amounting to approximately nine billion euros. The hardest-hit sectors were transport and warehousing, other services, and the hotel and restaurant industry.
Alexander Karpf, chief analyst of the German Chamber of Industry and Commerce (DIHK), commented, "This February figure is the highest in twelve years, and we can't ignore the sluggish demand both at home and abroad, high uncertainties due to U.S. trade policy, and mounting financial burdens like taxes, energy costs, and bureaucracy. It's taking a huge toll on corporate profitability."
Pressure Points and Trends
Last year, insolvencies in Germany skyrocketed by 52% compared to 2020, with some experts predicting up to 26,000 potential insolvencies in 2025 — the highest since 2015 [2][4]. Economic pressures contributing to this trend include surging operational costs, staff shortages, shrinking profit margins, and overall economic uncertainty causing consumer restraint.
More specifically:
- The transport and warehousing sector faces escalating costs like fuel and logistics expenses and supply chain disruptions.
- Other service industries grapple with tightened margins and competition worsened by labor shortages and economic instability.
- The hospitality sector battles high labor shortages and increasing input costs, further strained by cautious customer spending due to economic uncertainty.
All this contributes to the wave of closures and insolvencies in gastronomy and related services.
Beyond the Numbers: A New Economic Reality
Germany's GDP showed a slight contraction (-0.2%) in 2024 but is projected to grow modestly (0.4-0.7%) in 2025 [1]. With such a tenuous recovery, companies are under intense pressure to innovate, adapt through automation, AI, and efficiency improvements—strategies critical to mitigate insolvency risk, especially in tech-driven sectors. Furthermore, insolvencies provide opportunities for acquisitions and restructuring in the German market [1][3].
For instance, the insolvency of Lilium, an aviation company, triggered financial distress and ultimately bankruptcy at Customcells, a German lithium-ion battery manufacturer that supplied Lilium. The domino effect demonstrates the interconnected risks and cascading insolvencies within supply chains and specialized manufacturing industries [5].
In conclusion, rising company insolvencies in Germany reflect broader economic challenges that particularly impact transport and warehousing, other services, and gastronomy sectors. This volatile landscape calls for strategic adaptation and restructuring, while also highlighting acquisition opportunities to seize emerging business ventures.
- Despite the slight increase of only 3.3% in company bankruptcies in April, the German Chamber of Industry and Commerce warns that we're not out of the woods yet, as the statistics show a high number of insolvencies, particularly in the transport and warehousing, other services, and hotel and restaurant industries.
- The statistics for February showed an alarming 15.9% increase in company insolvencies compared to the previous year, with the hardest-hit sectors being transport and warehousing, other services, and the hotel and restaurant industry.
- With surging operational costs, staff shortages, shrinking profit margins, and overall economic uncertainty causing consumer restraint, some experts predict up to 26,000 potential insolvencies in Germany by 2025, the highest since 2015.
- The insolvency of Lilium, an aviation company, caused financial distress and ultimately bankruptcy at Customcells, a German lithium-ion battery manufacturer that supplied Lilium, demonstrating the interconnected risks and cascading insolvencies within supply chains and specialized manufacturing industries.
