BERLIN, Jan. 12 (Xinhua) -- German companies started 12.3 percent more insolvency procedures in December 2023 compared to the same period in 2022, according to provisional figures published by the Federal Statistical Office (Destatis) on Friday.
It was the seventh month in a row with double-digit year-on-year growth in the number of new insolvency procedures. From January to October 2023, corporate insolvencies were up 24.1 percent year-on-year, according to Destatis.
These figures, however, do not mark the beginning of a tsunami of insolvencies, Christoph Niering, the insolvency administrator and chairman of the Registered Association of Insolvency Administrators, said on Friday.
"We are still primarily observing a catch-up effect in the current insolvencies," Niering added. Companies with outdated business models or sectors with structural problems, such as Germany's hospitals and the real estate industry, were particularly affected.
The situation in hospitals is "worse than ever before," the German Hospital Federation warned at the end of last year, expecting insolvencies to reach record levels in 2024.
Around 70 percent of the country's hospital operators fear that the economic situation will deteriorate further this year, according to a survey by the German Hospital Institute.
The retail sector has also been affected. Earlier this week, Germany's largest department store chain Galeria Karstadt Kaufhof had to file for insolvency due to the collapse of its holding company Signa Group. It was the third insolvency filing for the troubled store chain in less than four years.
The catering industry in Germany is also anticipating a growth in insolvency proceedings. Since the beginning of 2024, the earlier value-added tax rate of 19 percent on restaurant meals has been reinstated after the government had reduced it to 7 percent during the COVID-19 pandemic.
As a result, "business closures and insolvencies will be inevitable from January 2024," the German Hotel and Restaurant Association said at the end of last year.
