With 8.950 failures recorded in the third quarter of 2022, the bar of 38.000 failures over 12 months has been crossed

With 8.950 collective proceedings opened between July 1 and September 30, the level of defaults increased by 69% compared to the summer of 2021, a rate not observed for 25 years. Over 12 slipped months, the bar of 38.000 defaults has been crossed. With 10.000 more procedures over one year (+34%), France is back to the default levels of summer 2020, but is still far from the 53.500 procedures observed at the end of September 2019.

In terms of sectors, B2C activities (retail trade, catering, personal services) are still severely weakened. Worrying signals are emerging in the building sector (finishing work, manufacturing and trading of materials). As for the regions, if all the territories are in the red, the PACA region seems to resist the best. Conversely, Hauts-de-France - where defaults doubled during the summer - returned to a situation equivalent to 2019. Finally, the increase in claims among SMEs with fewer than 50 employees caused the number of jobs threatened, which is now approaching 33.000.

For Thierry Millon, director of Altares studies: “The number of business failures is increasing very quickly. The difficulties, which have been concentrated in recent months on B2C activities, are spreading and are no longer sparing SMEs. The very tense economic context is undermining buyers' confidence and the rise in risks is causing financial management to tremble. The poor figures for the month of August (+98% vs. August 2021), a period that is traditionally calmer, testify to the urgency of certain situations. We are still a long way from 50.000 annual procedures, but the very strong acceleration of recent months could impact suppliers who would struggle to manage the sudden increase in customer defaults, especially SMEs. 10.000 more failures over a year, these are also many invoices that will remain unpaid. »

The number of failures up by 69%, a rate never seen in more than 25 years

Records follow from year to year, but for diametrically opposed reasons. With less than 5500 failures, the level of claims for the 3rd quarter of 2021 was the lowest ever observed in 25 years. This summer 2022, 8950 companies failed between July 1 and September 30, 2022, that's 68,5% more than a year earlier. A record increase, never observed until today. If we have not yet crossed the threshold of 10.000 procedures in the summer of 2019, the return to pre-Covid standards is accelerating.

For reference, over the past 25 years, increases of more than 20% have only been observed on three other occasions: during the 2008 financial crisis (+22% in the 4th quarter of 2008 and in the 1st quarter 2009) and in the 1st quarter of 2002 (+25%) compared to a 1st quarter of 2001 disturbed by the strike of the judges of the commercial courts.

Over 12 months, the bar of 38.000 insolvency proceedings has been exceeded for the first time since the summer of 2020. An increase of 10.000 defaults over one year, which does not however bring France back to its default levels of September 2019 (53.500).

Backup procedures are still few in number (229) compared to all openings, but in this 3rd quarter of 2022, their number exceeds the pre-crisis thresholds. It is even the highest summer value since 2016.

Reorganization proceedings (RJ) are rapidly increasing by 63,2% with 2109 judgments pronounced. They still represent less than one in four judgments (24%), a rate lower than the 30% recorded before Covid.

Direct judicial liquidations (LJ), still concentrate nearly three quarters (74%) of opening judgments. This rate is significantly higher than that observed before the health crisis (68%). They involved 6612 companies, an increase of 71,3%.

The youngest companies increasingly vulnerable

Companies between zero and five years old account for 45% of all proceedings initiated. Among them, those under three years old, born with the health crisis, are hard hit (+70,6%), a phenomenon even more marked among companies between three and five years old (+81,6%).

Most (86%) of failing young companies are commercial companies created under the status of SARL or, increasingly, SAS (including SASU) with little capitalization (median share capital of 2000 euros).

SME insolvencies accelerate and return to 2019 lows

Three-quarters of the procedures concern VSEs with fewer than three employees (6720 out of a total of 8950).

VSEs with three to nine employees have 1500 failures. They are therefore the ones that give the quarterly trend.

The situation is complicated for SMEs with less than fifty employees.

439 SMEs with ten to nineteen employees defaulted this summer, which is 77% more than a year ago and now more than in the summer of 2019 (381).

SMEs with twenty to forty-nine employees face an even more marked acceleration. This quarter, the number of defaults more than doubled (+111%) to reach 186 openings, i.e. a level approaching that of summer 2019 (193).

These failing SMEs are found in many sectors, in particular construction, transport, catering, industry or automobile trade. The greater vulnerability of these SMEs is causing the number of jobs at risk to soar, which is now approaching 33.000. On the other hand, failing companies with more than fifty employees are relatively few in number (55) and are trying to resist (+22%).

Insolvencies on the rise in all sectors

All regions “in the red”: PACA resists better, Hauts de France struggles

Hauts de France, the only region to regain the loss ratio of 2019

The region has recorded its twelfth consecutive month of rising business insolvencies and the months this summer have shown no signs of improvement. Openings of proceedings have more than doubled (+116%) and now exceed the level of the 3rd quarter of 2019 (875 vs 828).

Corsica shows the largest increase in the number of defects

The region has 54 companies in default this 3rd quarter against 21 a year earlier, an increase of +157%. No other region shows such rapid degradation.

In four other regions, the increase in business failures exceeds + 80%

In Occitania, the opening of proceedings has been on the rise for nine months. Summer even marks an acceleration with a jump of more than 130% in August. Over the quarter; the region recorded 814 defects (+91%).

In Auvergne-Rhône-Alpes, the rise in insolvencies, uninterrupted since November 2021, is even stronger this summer 2022 (+87%). The region has 1050 openings of proceedings.

In Pays de la Loire, defaults exploded by 314% in August. Over three months the increase is 87% (360 procedures).

Normandy recorded a very degraded month of July (+138%) which weighed on the quarterly trend (82%).

Three regions record a deterioration of between +60% and +80%

Brittany recorded a 103% increase in the number of business failures in July and 206% in August. Thanks to a much better month of September, the region limits the quarterly increase to +77%;

The Center Val de Loire stabilized the opening of procedures in September but over the quarter the increase remains significant (+71%).

Bourgogne-Franche-Comté does barely better than the national average (+64%).

Three regions fall just under 60%

In Nouvelle-Aquitaine, Ile-de-France and Grand Est, the evolution of the number of failures is between 58 and 59%.

Provence-Alpes-Côte d'Azur, the best regional performance

The region contained the rise in defaults to 31% in August and below 5% in September. Under these conditions, over three months, the Provence-Alpes-Côte d'Azur region contained the increase to “only” 37%.

For Thierry Millon: “The hypothesis of a volume of business failures contained below the symbolic bar of 40.000 in 2022 remains at this stage plausible but compromised. The risk of energy shortages and soaring prices will greatly complicate the budget equation for the coming months for a large number of companies, regardless of their size or sector of activity. Especially since beyond the skyrocketing bills, there is also the problem of repaying debts (classic and/or PGE) or with Urssaf. The latter played a buffer role during the crisis but, like the rest of the economy, the return to normal prevails and with it the payment deadlines that will have to be met. As a result, early next year, courts may find more summonses filed by the agency in recovery action. The rise in business failures, which therefore seems irreversible, will continue in 2023. Anticipation and prevention will remain the watchwords. »