Company bankruptcies climbed to a record level in Switzerland, partly due to the expiration of Corona pandemic aid. For lenders, bankruptcies are not yet cause for concern.
The gloomy economic climate in Switzerland has spilled over into bankruptcies. Over the past year, more than 10,000 company failures were recorded for the first time. As the Creditreform creditors' association announced (in German) on Thursday, a total of 10,127 companies went bust last year, an increase of nearly 37 percent. Around two-thirds resulted from over-indebtedness and the remaining ones were due to organizational deficiencies.
The situation is not expected to improve this year, the association says. The war in Ukraine significantly increased energy costs for some companies, and high inflation in the eurozone is likely to trigger recessions in many countries as the environment will no longer be manageable for many companies. Allianz Trade comes to a similar conclusion in an international study, according to which Swiss corporate insolvencies are likely to rise by a further five percent in 2023.
Deliberate Neglect
Creditreform says the large increase of over 46 percent in bankruptcies due to organizational deficiencies indicates some of these companies are deliberately left in a neglected state by their governing bodies to evade responsibility. For example, there was a lack of legally required bodies, a business domicile, an auditor, or a formal decision by the board of directors to forego an audit.
The figures can only be compared with the previous year to a limited extent. In the Corona years of 2020 and 2021, the bankruptcies of many zombie companies that were inevitable at the time had been delayed by government support measures.
Corona Loans Expiring
The «Covid 19» loans have to be repaid within eight years, with amortizations agreed upon between companies and lenders. The Swiss Bankers Association (SBA) recommended that banks participating in the loan program begin repayments at the end of March 2022. If payments due on a Covid 19 loan remain unpaid, the bank can assign the receivable to an organization for receivables management.
ZKB on Track
Like other banks, Zuercher Kantonalbank (ZKB) is following these recommendations. It started reducing Covid19 federal loans last spring so that they would be fully repaid by 2027.
As ZKB recently told finews.com, not all borrowers were able to make the repayment and the bank, in consultation with the guarantee cooperatives, has so far responded accommodatingly with reduction deferrals.
So far, ZKB repaid almost 40 percent of the loan volume of around 800 million Swiss francs originally disbursed. According to the bank, this puts it above the Swiss average in terms of repayments.
