Business insolvencies accelerate with a 49% increase over one year

With 9.826 insolvency proceedings opened between April 1 and June 30, the level of insolvencies increased by 49% compared to the 2nd quarter of 2021, after having reached +35% in the 1st quarter. The rise is accelerating. Over 12 months, there is a general increase of 15% for 34.200 judgments. The levels are at their highest since October 2020. While they remain below those of 2019, the pre-Covid reference year, the gap is narrowing. With 800 companies falling into default each week, the curves suggest a total of 37.000 defaults in 2022.

The B2C sectors of activity (personal services, catering, trade) are the most weakened and the young structures created just before or during the crisis are suffering (+136%). SMEs, with 731 procedures opened in 3 months, exceeded the 2019 thresholds. In the territories, the increase concerns all regions. The trend is particularly marked in Hauts de France, where the number of procedures doubles, and in Center Val-de-Loire, which exceeds its pre-crisis levels.

For Thierry Millon, director of Altares studies: “The figures for the end of 2021 and the first quarter of 2022 demonstrated a return to reality on the insolvency front. Since February, the upward trend has accelerated markedly with an average monthly increase of 45%. We are now approaching the levels seen in 2019, the pre-crisis reference period. The smallest companies with less than 3 employees are the most affected, in particular the youngest, which show liquidation rates identical to 2019. Another sign of concern is that more and more SMEs are also defaulting and are finding identical thresholds as before the crisis. »

Up 49,2% in the 2nd quarter of 2022, the number of business failures is approaching pre-Covid crisis levels

9.826 companies defaulted between April 1 and June 30, 2022, an increase of 49,2% compared to the same period of 2021. The increase is clear and increasingly rapid, but the levels are still very lower than those of spring 2019 and its 12.300 procedures.

Over 12 months, 34.200 companies defaulted. The overall upside is “only” 15% due to July to October 2021 levels which were still down (-16%). As an annual trend, the volumes of insolvencies are therefore rather similar to the situation at the end of 2020. (35.500 in October 2020 and 34.000 in November 2020 over 12 sliding months).

With 289 files recorded this quarter, the number of backup procedures is at its highest since 2018 and has increased by 75%. However, this device represents only 3% of all procedures.

Reorganization proceedings (RJ) are rapidly increasing by 55,5% for 2325 judgments pronounced. They represent less than one judgment in four (24%), a rate well below the 30% recorded in the 2nd quarter of 2019.

73% of judgments end in direct judicial liquidations (LJ), a rate much higher than the levels traditionally observed (68%). They targeted 7212 companies, an increase of 46,4%.

The distress of young “Covid” companies

Business creation has never been so dynamic. While INSEE announced a record of nearly 1 million new registrations for 2021 alone, 2,6 million companies have emerged in 3 years, including 700.000 commercial companies. But these commercial structures are also the most fragile. They represent 85% of failures and even 93% of failures of companies less than 3 years old. Certainly, we create more companies but we lose more.

One of the most striking indicators of this quarter concerns precisely the young structures whose levels of failures explode by 136%, with 1750 open procedures. 1411 of them were directly liquidated, a number very close to that of the 2nd quarter of 2019 (1431). Young restaurateurs (272), particularly vulnerable, are almost five times more numerous than a year earlier to default.

Almost as many failing SMEs as before the crisis

93% of companies in default of payment are VSEs, a relatively constant share. With 9095 procedures recorded, their number increased by 47% over one year.

As for SMEs, the rise is accelerating much more clearly. With 731 terminations against 420 a year earlier, the level of failures increased by 74%. Ultimately, SMEs show volumes similar to the pre-crisis period.

This trend is all the more marked in SMEs in IT services (+100%) and road freight transport (+200%).

Insolvencies on the rise in almost all sectors

For Thierry Millon, director of Altares studies: “This first half ends with an unequivocal trend: the rise in insolvencies that began at the end of last year is very clear. Yet the business climate is not collapsing, despite an alignment of geopolitical and macroeconomic factors that would encourage a wait-and-see attitude. Inflation, soaring energy prices, disruptions in supply chains and the closure of certain markets are slowing growth, but the economy is holding up and companies are resisting. Over the past 12 months, more than 34.000 companies have fallen, but we are still far from the peaks of the 2008 financial crisis, which exceeded 64.000, or even the 52.000 procedures recorded in 2019. Our business fabric is therefore resisting, but the curves that we observe must be prepared to register between 35.000 and 40.000 defects at the end of the year. Because the specter of recession hangs over and companies will not be able to continue to dip into their cash flow forever while waiting for the resumption of household consumption. The savings of the French continue to increase. The Banque de France estimates total savings at 319 billion euros in the 1st quarter of 2022, of which 151 billion are due to the "Covid surplus". To help companies cope, the executive is deploying new support measures such as the opening of a "gas & electricity" aid window or the maintenance of the support plan for emerging from the crisis (see box below). below). For the time being, Altares observes that late payments are still generally under control. A signal that is all the more important as the supplier relationship and the resilience of supply chains have been particularly badly affected by successive confinements and the war in Ukraine. The Governor of the Banque de France is currently ruling out the hypothesis of a recession for the next few years. Uncertainty therefore calls for caution. Vigilance and management as close as possible to its portfolios of client and supplier companies is essential. But in the end, resilience could well be confirmed again this year as the watchword of our companies. »