Read news from:
Austria
SHARE
COPY LINK

FINANCIAL CRISIS

Dramatic rise in bankruptcies

The number of Swedish firms going bust in March increased by 85 percent, in comparison with March 2008, according to a new report from credit rating agency UC.

Published: 7 April 2009 10:00 CEST

“This is due to the weakening economy and the decline of private consumption in these worrying times,” UC’s Fredrik Polland said on Tuesday.

Worst hit by the wave of bankruptcies are newly started small and medium-sized retail firms in Stockholm, Gothenburg and Malmö.

“Many new stores and shopping centres have been established recently. When market demand declines there are not enough customers to go around. It is particularly apparent in the major cities where there are a large number of retailers.”

The situation was compared by UC to the crisis that hit Sweden in the beginning of the 1990s.

“The growth in bankruptcies that we are now seeing casts my mind back to the crisis at the beginning of the 1990s,” according to UC’s Roland Sigbladh.

Sigbladh warned though that the dramatic change on March 2008 should be placed in the context that last year experienced the lowest level of company failures in modern times.

“The crisis in the 1990s involved many more bankruptcies and differed from today with as there were property company failures. But the rate of the increase is familiar from that period,” Sigbladh said according to a UC press release on Tuesday.

Bankruptcies increased by 51 percent over the course of the first quarter.

1,909 companies filed for bankruptcy during the first quarter, 735 in March.

So far the rate of bankruptcies is lower than in 2003, in the wake of the IT stock market bubble. But UC forecast that these levels would soon be exceeded.

“But the proportion of company failures has some way to go to beat 2003. The large number of companies today is also in itself a significant explanatory factor behind the dramatic rise in bankruptcies,” according to UC.

Aside from retail the transport sector and the metal industry are the sectors which have been hit hard by the wave of bankruptcies.

BANKRUPTCY

Half of Swiss hotels, restaurants risk bankruptcy: employer group

Nearly half of Switzerland's restaurants and hotels risk bankruptcy within months failing financial support to weather devastating Covid-19 measures, the sector's employer group warned Sunday.

Published: 11 January 2021 08:00 CET
Half of Swiss hotels, restaurants risk bankruptcy: employer group
Closed restaurants face bankruptcy in Switzerland. Photo by AFP

The Swiss government is expected this week to extend the closure of bars, restaurants and leisure facilities across the country until the end of February to control stubbornly high coronavirus case and death numbers.

But industry federation GastroSuisse warned in a statement that if done  without providing significant financial support, around half of businesses in the restauration and hospitality sector could go belly-up by the end of March.

The group polled around 4,000 restaurant and hotel owners, and determined that 98 percent of them already are in urgent need of financial support.

“The very existence of many of them is threatened,” GastroSuisse president Casimir Platzer said in the statement.

While restaurants and other businesses quickly received financial support when Switzerland went into partial lockdown during the initial wave of infections, GastroSuisse has complained that support during subsequent sporadic closures has lagged.

Before the crisis, more than 80 percent of Swiss restaurants and hotels were in a good or very good position of liquidity, the study showed.

But that situation quickly deteriorated.

In October, as a second wave of infections picked up steam, the organisation cautioned that 100,000 jobs were at risk.

And during the final two months of 2020, nearly 60 percent of restaurant and hotel establishments were forced to conduct layoffs for a second time, it said.

Without government intervention, a third wave of layoffs is looming, Platzer warned.

The latest closures were to be lifted on January 22, but the government said last week it wanted to extend the deadline for a further five weeks.

GastroSuisse said the final announcement, due Wednesday, needed to be
accompanied by “immediate and uncomplicated” financial support to the sector
to avoid “disaster”.

USAM, a union that represents small and medium-sized businesses in Switzerland, called Sunday for the government not to prolong or tighten measures, warning it was an “existential question” for many of its members.

Switzerland, a country of 8.6 million people, is currently registering around 4,000 Covid-19 cases a day and had by Friday seen nearly 476,000 cases and 7,545 deaths since the start of the pandemic. 

SHOW COMMENTS