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However, there is no talk of a wave of insolvencies, according to the creditor protection association KSV1870 in a press release. Rather, it is an “average insolvency year” with a moderate increase that can be attributed to the past years of crisis.
In the first three quarters of this year, around 3,900 companies declared themselves insolvent. That is almost ten percent more than in the same period last year, but only 2.6 percent more than in the pre-crisis year 2019. At the same time, the number of bankruptcies that were not opened due to a lack of cost coverage increased by 6.4 percent to over 1,500 bankruptcies. The number of affected employees increased year-on-year by 80 percent to 18,400 people and the number of affected creditors increased by 44 percent to 31,400 victims.
According to preliminary projections by KSV1870, liabilities have increased by 24.6 percent to around 1.9 billion euros compared to the previous year. This development is primarily due to the largest bankruptcies of the year so far. In addition to the furniture retailer Kika/Leiner (132 million euros in liabilities), there are two other trading companies: the KSR Group, a dealer of two-wheelers and quads, (80 million euros) and the Sport 2000 cooperative Zentrasport Austria (around 69 million euros).
“Insolvency driver of the country”
According to the creditors’ protection association, three sectors are still the “insolvency drivers in the country”: trade (737 bankruptcies, +12 percent), construction (650 bankruptcies, +13 percent) and the catering and accommodation sector (507 bankruptcies, +19 percent). Although the hospitality industry is currently recording the greatest growth among these three sectors, the construction industry in particular is coming under increasing pressure. In addition to the already increasing insolvencies, there is a sharp decline in orders, according to KSV1870. This is in turn due to the difficult situation of the construction industry in Germany and the decline in building permits in Austria compared to 2019.
Due to developments in the construction industry, the KSV1870 expects a total of 5,300 corporate bankruptcies by the end of the year, which is the first time since the pre-crisis year of 2019 that there will be more than 5,000 bankruptcies. “Despite the developments in trade and the construction industry, from today’s perspective we still do not see a wave of insolvencies coming to Austria,” noted Karl-Heinz Götze, head of KSV1870 Insolvency.
Personal bankruptcies increased by 6.5 percent
Private bankruptcies increased by 6.5 percent in the first nine months of this year, and around 6,600 regulatory proceedings were opened. However, the average amount of debt fell from just under 111,000 euros to around 104,000 euros per debtor.
The development in the individual federal states was sometimes very different. While in Vorarlberg the increase was most significant at 41 percent in the first three quarters, there was a decline of 8.1 percent in Styria. According to absolute figures, Vienna is still clearly at the top with over 2,100 cases and an increase of 5.2 percent.
The KSV1870 expects a total of around 8,800 private bankruptcies this year. This means that around 600 more cases would appear in the domestic insolvency statistics in 2022 compared to the previous year. However, the pre-crisis level from 2019 with around 9,500 private bankruptcies opened would still not be reached.
“The financial situation of private individuals continues to deteriorate, and even if people handle their money more consciously in times of crisis, it will probably only be a matter of time before the number of private bankruptcies skyrockets significantly,” expects Götze.
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