Wave of bankruptcies continues in 2024
The third consecutive wave of bankruptcies is shaking the Swiss economy. While more than 8,000 companies are likely to file for insolvency again in 2024, young companies and traditional firms are particularly affected. Geopolitical tensions, economic uncertainties and rising commodity prices are weighing on the markets. However, creditors who check their creditworthiness can make the risk calculable.
In 2024, 23 companies had to file for bankruptcy every day. That’s around 5500 by August. Forecasts predict more than 8,000 insolvencies by the end of the year, which corresponds to an increase of over 12 per cent compared to previous years. What is particularly striking is that the bankruptcy figures are almost a third higher than in the pre-corona years of 2018 and 2019. However, it is not only the official insolvencies that are causing concern, but also cases in which claims are written off without bankruptcy proceedings being initiated.
Abusive bankruptcies and challenges
The statistics also reveal abusive bankruptcies in which controlling bodies such as boards of directors evade their responsibilities or deliberately bring about insolvency in order to secure unlawfully generated profits. In addition, the prospect of a bankruptcy dividend remains sobering for creditors. In 58 per cent of cases, there are insufficient assets, while 40 per cent of proceedings are concluded summarily.
Affected sectors and prominent cases
The mechanical engineering and metal industries are particularly hard hit. Traditional companies such as the Kreuzlingen-based metal construction company Neuweiler and Marton AG from Flawil had to file for insolvency in 2024. The reasons include high energy prices, material shortages and weakening demand in international markets. The bankruptcies not only cause financial damage, but also social damage, as many employees lose their jobs.
Credit checks as a protective measure
In view of the ongoing uncertainties, it is advisable to check the creditworthiness of business partners, including existing customers, every time a business transaction is concluded. Tools offer quick insights to minimise risks and, in case of doubt, to opt for advance payment. Although losses can never be completely avoided, a solid credit check can make them calculable.
Start-up boom and young companies at risk
In parallel to the wave of bankruptcies, there is a start-up boom. In 2024, around 53,000 new companies were entered in the commercial register. However, young companies are particularly susceptible to insolvency in the first five years. Covid-19 after-effects in particular, such as outstanding bridging loans, increase the risk for many of these companies.
Difficult framework conditions
Recession fears among trading partners such as Germany and Austria, the strong Swiss franc and geopolitical conflicts are further complicating matters. In Switzerland, overregulation and outstanding government debt are a burden for many companies. However, the introduction of mandatory bankruptcy proceedings for state claims from January 2025 could lead to a market shakeout by weeding out so-called zombie companies.