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Second wave of insolvencies seen

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Second wave of insolvencies seen
Photo: DPA
12:34 CEST+02:00
Insolvency administrators are expecting a record number of German companies to go bust towards the end of this year and into 2010, as the effects of the global recession take hold.

A survey conducted for credit insurer Euler Hermes in Hamburg, a subsidiary of Allianz, shows the bad economy is expected to be responsible for a second wave of collapsed companies.

The restrictive policies of banks on awarding credit are expected to play an exacerbating role, according to the survey.

Nearly two-thirds of the insolvency administrators asked, believed that the current record of around 39,000 companies collapsing, which was seen in 2003, would be exceeded soon.

Half said they expected the new high-point of this second wave of collapses to be reached towards the end of 2009, while the others said it would crash in 2010.

Around a third of these collapses would be directly caused by the global recession, the administrators said.

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