Corporate insolvencies in Germany have hit a 10-year high. From rising costs to weak demand, what’s behind the surge? And what can be done to support struggling businesses before it’s too late?
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00:00Bernd Wigge is an insolvency administrator.
00:07Currently, he's assessing an industrial company using a 3D camera to capture a coding room.
00:17High-tech tools help him document complex industrial plants and their material value, an increasingly common task.
00:26The rise in insolvency cases is significant.
00:32From our perspective, this reflects the broader economic situation.
00:37Liquidity crunches in many areas, declining earnings and a shift in banking policies, where loans are harder to secure,
00:46all contribute to rising insolvencies and bankruptcies during a recession.
00:53All valuable assets must be assessed. German insolvency law prioritizes business rescue.
01:00But with more companies unable to recover, Bernd Wigge often has to liquidate assets by putting them up for auction on his platform.
01:14In 2019, Germany recorded well over 18,000 business insolvencies.
01:20The number dropped in 2021 and then rose again, surging past 22,000 in 2024.
01:31Private or consumer insolvencies declined slightly in 2020 to 42,000 cases.
01:39However, they have since risen steadily to more than 72,000 cases in 2024.
01:46The situation is different at this company in northeast Germany with 70 employees,
01:51which specializes in designing and manufacturing customized conveying systems.
01:58The insolvency administrator is documenting the company's assets,
02:02but the managing director has already secured an investor to help restructure the company and keep the business running.
02:11We need a capital injection, that much is clear. We need a backer with strong credit.
02:19An increasing number of entrepreneurs in Germany are under financial strain.
02:23For managers and employees, insolvency is a stressful experience.
02:29I can tell you the nights were short. Most of the time I had to work long hours.
02:34Then I usually slept badly or woke up early. It was an incredibly tough time.
02:41The causes of insolvency include labor shortages, inflation, bureaucratic costs
02:47and high energy prices since Russia's full-scale war against Ukraine.
02:53For example, before the war in 2021 and even through the end of 2022,
02:59our total energy costs were about 70,000 euros a year.
03:04By 2024, that figure had more than doubled to 146,000 euros.
03:12Our journey continues north, to the island of Usedom.
03:18Master carpenter Manfred Pohl has rescued a traditional business from insolvency.
03:24Korb-Vac is once again producing beach chairs, which are rented out to visitors in the summer.
03:30This luxury model costs 13,000 euros.
03:35We offer the option of incorporating a massage function, for example.
03:41You can choose different settings, different options, to get a massage while you're lounging in your chair.
03:48There are various drink options, for example here with a crushed ice tub to chill champagne.
03:55Perfect for a cozy time with your sweetheart.
03:59There's also integrated lighting right here, and a radio and a stereo system.
04:09The company had been burdened with debt, partly due to high energy costs and outdated machinery.
04:16But now its 13 employees are busy again and orders are coming in.
04:22When you've worked with beach chairs for so long, three decades in fact, you even dream about them at night.
04:29That's just how it is.
04:35Korb-Vac has benefitted from its new managing director,
04:39who has been working with the company for more than 20 years.
04:43Now his computer-controlled CNC milling machines and saws are also crafting parts for the beach chairs.
04:53The synergy between both companies is great,
04:56and it's a real pleasure to work with them again.
04:59It's a real pleasure to work with them again.
05:02It's a real pleasure to work with them again.
05:05It's a real pleasure to work with them again.
05:09The synergy between both companies is key.
05:12Beach chairs are 85% wood.
05:14What once took a full day to craft by hand, now takes just 18 minutes on the CNC machine.
05:20Then that part of the beach chair is done.
05:25Retaining all his employees is essential.
05:28A shortage of skilled labour would pose a serious risk to the business.
05:33Heating costs remain low, since the company burns its own wood waste.
05:37Pohl has personally invested several hundred thousand euros to modernize the factory.
05:48Any entrepreneur knows there's no such thing as guaranteed security.
05:52There's always risk.
05:54But we really liked and believed in this company,
05:57so we took the chance to bring it back to the top.
06:00Finally, he shows us the world's largest beach chair,
06:03built by his team and proudly displayed on the promenade.
06:07The next bathing season is around the corner,
06:09and Korbweck's signature beach chairs will be in high demand.
06:13So for some companies, there's a happy end.
06:16But for thousands of others,
06:18Germany's wave of insolvencies continues, with no clear end in sight.