Bankruptcies in Luxembourg remain at a high level

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Creditreform has analysed the numbers of bankruptcies for Luxembourg in 2020 and has compared them with the numbers from the previous year. Herbert Eberhard, the Managing Director of Creditreform Luxembourg SA, underlines: “With a slight decrease of 5.07%, to 1199 company bankruptcies in 2020, the number of bankruptcies in Luxembourg has remained almost the same compared to the previous two years." In 2019, 1263 bankruptcies were recorded, and in 2018, 1195. Business insolvencies in the Trier region have decreased by 23.48%. In Germany, the 13.4% decrease in corporate insolvencies is the lowest level since 1999. Preliminary figures from Belgium and France show a decrease in bankruptcies of over 30 %.

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15/01/2021 |
  • Creditreform

The number of bankruptcies in the Grand Duchy fell to 1199 in 2020. This figure includes the bankruptcies from December 2019 that were only published in 2021. Compared to the previous year's figure, this is a decrease of 5.07%.

The number of companies with an age of more than 5 years that went bankrupt during this period increased again to 81.32% compared to 2019 (75.85%).
The share of bankruptcies of companies younger than five years is 18.68% in 2020 and has decreased compared to 2019 (24.15 %).

According to competent judicial districts, a decrease of 3.69% is reported in Luxembourg with 1096 bankruptcies (1263 in the previous year). In the judicial district of Diekirch, 103 proceedings were recorded in 2020 (125 in the previous year). This is a decrease of 17.60 %.

Creditreform has also scrutinized the defaults in the various industries.

The frontrunner continues to be the services sector with 882 cases in 2020 (884 in 2019) which is only down by 0.23%. The Horesca sector has a decrease of 25,14 % to 127 bankruptcies compared to 171 in 2019. With 214 business failures compared to the previous year (253), bankruptcies in the trade sector have decreased significantly with a decrease of 15.42%. Bankruptcies in the construction sector fell by 25.81% from 124 to 92 firms, partly due to the strong construction activity. These are mainly smaller firms. In the manufacturing sector, there was an increase of 450 % in 2020 compared to 2019, with 11 company bankruptcies. However, this brings the figures back to the level of 10 bankruptcies in 2018.

In terms of the legal forms of companies, a slight increase of 3.75% or 526 (507 in 2019) was recorded for corporations (SA). The limited liability company (Sàrl), as the most common legal form, continues to have the largest single share of bankruptcies, with a decrease of 10.91% to 653 bankruptcies (733 in 2019). However, this legal form, which is predominantly used by smaller firms, shows that the Corona aid in the SME sector (PME) is having an effect, particularly in the trade and Horesca sectors. Only 2021 and 2022 will show what effect "Corona" has had in these most affected sectors.

In 2020, a number of well-known companies went bankrupt, which also involved major job losses. First of all, the company Norbert Keller SA in Troisvierges, where 120 jobs were affected. The bankruptcy of Primavera Pain Sarl threatened 80 jobs. At the company Aluzare SA in Ehlerange, 43 jobs were affected.

Creditreform Luxembourg SA assumes that, due to the economic transformation in Luxembourg, the bankruptcy rate for older companies in the Grand Duchy will remain at a high level in 2021. The bankruptcy rate for companies less than 5 years old is stable at a low level, which is due in particular to the good support of the state.

“The expiry of Corona aid will be decisive for the development of bankruptcies in 2021. Due to the strong service sector, however, the increases will be likely to be lower than in neighbouring countries” notes Herbert Eberhard.

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