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Number of company bankruptcies rising again in France

After two years of dead calm, activity in the commercial courts is slowly picking up again. In the first quarter of 2022, according to Altares company figures published on Monday, April 11, 9,972 companies were subject to bankruptcy proceedings. An increase of 35% compared to the same period last year, but still significantly lower than the low level observed in 2018 and 2019, when approximately 14,000 defects were registered in the first three months of the year. In all, these two years totaled 107,000 insolvency proceedings, compared to just under 61,000 in 2020 and 2021. “We are less than half of the pre-crisis activity level,” confirms Frédéric Abitbol, ​​President of the National Council of Judicial Officers and Bailiffs (CNAJMJ).

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The wave of foreclosures, so feared at the start of the Covid-19 crisis, has been curbed by the “whatever it takes” policy, which made it possible to support companies facing downturns, sometimes even total, of their activities. This aid represented a total of EUR 240 billion in the form of loans – including EUR 145 billion in state-guaranteed loans to 700,000 companies – and grants.

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The end of aid and the start of repayment of state-guaranteed loans explain why default rates are rising again. These bankruptcies mainly affect young companies, younger than five years. They were established shortly before the health crisis and “ didn’t have time to meet their market, their activity didn’t really take off explains Thierry Millon, director of studies at Altares. They are especially numerous at general food stores, small grocery stores or convenience stores that have not “held” it: defects in this sector of activity are three times more numerous in the first quarter of 2022 than in the previous quarters.

Catering and very small companies

Bankruptcies have doubled in a year in the traditional restaurant sector, which may not have returned as many customers as expected. They also increased significantly in services to private individuals, hairdressers and beauty salons. As these are mainly very small companies, the impact on jobs remains relatively low. “The cases we dealt with at the start of the year represent a total of 27,000 jobs, and overall, the legal proceedings allow two-thirds of them to be saved,” reminds Mand abitbol.

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