Insurer foresees bankruptcy wave due to corona debts

Source: Allianz Trade, via Taxlive.nl

The number of bankruptcies in the Netherlands is expected to rise 52 percent this year, credit insurer Allianz Trade says after research. This makes our country the global leader. On average, 21 percent more companies worldwide are expected to go bankrupt this year.

Allianz attributes the strong growth in the Netherlands to the generous financial coronas from the government that must now be repaid. "Many SMEs have to pay corona debts and back taxes. The tax authorities have sent final demands to many tens of thousands of companies. A good portion of those companies cannot comply and will go bankrupt," said the experts at the credit insurer.

In 2021, the number of bankruptcies in the Netherlands actually decreased by 43 percent. Also last year, the number of bankruptcies remained limited. In absolute numbers, Allianz thinks that 3270 companies will fail this year. Next year there are expected to be 3,530. That is close to the average number of bankruptcies before the corona pandemic.

Allianz charted bankruptcy rates for 44 countries. The global acceleration in bankruptcies is related to the economic growth slowdown and tighter credit conditions.

The credit insurer also warns of large groups that could collapse. "Our research shows that the number of bankruptcies of companies with a turnover of more than 50 million euros is already above pre-pandemic levels. Those large companies usually drag a whole trio of small businesses into their fall."

Credit insurer Atradius also recently predicted that the Netherlands will face heftier bankruptcies this year than last. The organization anticipates that nearly 80 percent more companies will be forced to close.

For now, the number of bankruptcies is low so far this year, according to the Central Bureau of Statistics (CBS). The number of bankruptcies decreased again in March after an increase in February, according to the statistics agency.