corporate bankruptcy could reach 30% in 2021

In Q1 2021, corporate bankruptcy climbed 15%, reports the Economist, specifying, on the basis of the declaration of the commercial courts, that “the duration of the aid and the ability to quickly control the pandemic will be essential to contain the wave of business failures after they paradoxically fell by 22% in 2020 under the effect of the slowdown in activity in commercial courts ”. However, the aid measures have enabled several companies to maintain and continue their activity despite the crisis, informs the Economist. This is the case of Hicham Bensaid Alaoui, managing director of Euler Hermes Acmar who indicated that more than 5% of the GDP has been injected into the coffers of companies.

However, the consequences for the recovery of the situation of companies vary according to the sectors of activity and the size of the company. Thus, “the support measures have allowed an average to strong improvement in activity for half of the companies”, while it is the opposite for others, said the daily. With regard to size, “the level of satisfaction stands at 44% among very small businesses and rises to 58% among large companies”. But with the health crisis still present, several companies risk landing in insolvency zone. Thus, business failures could reach 30% this year 2021.

Currently most companies, faced with the deterioration of the risk profile of their commercial portfolios, resort to credit insurance. According to the professionals, “the activity should return to the path of growth this year. However, the players in the sector are also taking their precaution, ”the newspaper concludes.

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