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Business failures 2020Sep

Published on 10/16/2020
Period under review: August 2020
In August 2020, the number of corporate bankruptcies decreased by 28.1% year-on-year
  • This decrease does not reflect a reduction in the number of distressed firms, but rather the impact of the lockdown on the operation of commercial jurisdictions and regulatory changes that temporarily modify the dates for characterising and declaring a firm as insolvent.
  • It can be observed in all sectors of activity and for most sizes of companies, without it being possible to analyse it from an economic point of view.
  • The gradual phase-out of these temporary provisions is reflected in a reversal of trend observable on data calculated on average over a sliding three months period. In seasonally adjusted data, the average number of insolvencies from June to August increases by 63% compared with the average number from March to May, which includes the lockdown period. However, the number of insolvencies over the last three months under review remains 40% lower than the number observed over the same period in 2018 and 2019 (see chart on page 3).
To find out more: data on business start-ups are reported by the French National Institute of Statistics and Economic Studies (INSEE): Business start-ups on the INSEE's website
A - Corporate bankruptcies by sector
Bankruptcies in number of legal units, year on year change (%)
Aggregate over the last 12 months (a) (gross data) Quater to quater sa/wda (bc) Monthly data sa / wda (c)
Aug. 19 Aug. 20 Aug. 20/Aug. 19 Sep. 20 prov. Sep. 20/Sep. 19 Aug. 20 June 20 July 20 Aug. 20
Business sector
Agriculture, forestry and fishing (AZ) 1,435 1,038 -27.7% 984 -30.0% 107.7% 74 116 99
Industry (BE) 3,748 2,536 -32.3% 2,449 -34.0% 29.6% 156 150 254
Construction (FZ) 11,585 7,923 -31.6% 7,446 -34.8% 86.5% 513 583 802
Wholesale and retail trade; repair of motor vehicles and motorcycles (G) 11,334 8,504 -25.0% 8,071 -28.5% 63.7% 580 614 817
Transportation and storage (H) 2,082 1,560 -25.1% 1,478 -29.0% 51.0% 87 91 139
Accommodation and food service activities (I) 7,219 5,222 -27.7% 5,009 -29.5% 70.2% 408 415 515
Information and communication (JZ) 1,272 1,036 -18.6% 979 -24.9% 58.9% 71 73 93
Financial and insurance activities (KZ) 1,106 856 -22.6% 812 -27.5% 4.3% 57 55 73
Real estate activities (LZ) 1,674 1,229 -26.6% 1,194 -28.4% 52.3% 92 118 111
Advisory & Business support activities (MN) 5,967 4,382 -26.6% 4,259 -29.1% 50.9% 335 324 366
Education, human health and social work services, Arts, entertainment and recreation, Other service activities (P to S) 5,411 3,705 -31.5% 3,504 -34.6% 39.9% 276 294 387
All firms (d) 53,055 38,147 -28.1% 36,324 -31.1% 63.0% 2,676 2,882 3,650
Source: Banque de France - database: Fiben. Data available in early October 2020: final for August, provisional for September.
Calculation : Banque de France - Companies Directorate - Companies Observatory
a Aggregate number of corporate bankruptcies over the past 12 months compared to the same aggregate one year ago
b Aggregate number of corporate bankruptcies over the past 3 months compared to the same aggregate three months ago
c sa : seasonally adjusted - wda : working day adjusted
d The line « All firms » includes legal units whose business sector is not known
B - Corporate bankruptcies by firm size
Bankruptcies in number of legal units, year on year change (%)
Aggregate over the last 12 months (a) (gross data) Quarter to quarter sa/wda (bc) Monthly data sa / wda (c)
Aug. 19 Aug. 20 Aug. 20/Aug. 19 Sep. 20 prov. Sep. 20/Sep. 19 Aug. 20 June 20 July 20 Aug. 20
Size
SME, among them 53,019 38,099 -28.1% 36,275 -31.1% 63.3% 2,669 2,878 3,648
Micro-enterprises and unknown firm's size 50,107 35,842 -28.5% 34,115 -31.4% 67.2% 2,504 2,724 3,466
Very small firms 1,716 1,346 -21.6% 1,276 -25.6% 21.4% 97 95 106
Small firms 843 621 -26.3% 606 -28.1% 3.0% 42 35 47
Medium-size firms 353 290 -17.8% 278 -22.8% 10.0% 26 21 22
ISE - Large Firms 36 44 22.2% 45 12.5%
All firms 53,055 38,147 -28.1% 36,324 -31.1% 63.0% 2,676 2,882 3,650
Source: Banque de France - database: Fiben. Data available in early October 2020: final for August, provisional for September.
Calculation : Banque de France - Companies Directorate - Companies Observatory
a Aggregate number of corporate bankruptcies over the past 12 months compared to the same aggregate one year ago
b Aggregate number of corporate bankruptcies over the past 3 months compared to the same aggregate three months ago
c sa : seasonally adjusted - wda : working day adjusted
C - Changes in corporate bankruptcies
1 - Number of bankruptcies
Aggregate number of bankruptcies over the past 12 months
From Dec. 1991 to Auguste 2020
2 - Change in bankruptcies
Year-on-year change in the 12-month aggregate
From Dec. 1991 to August 2020 (+September 2020 provisional)
(in %)
3 - Loan amounts of bankrupt non-Financial firms over loan amount
of all firms
Aggregate over the past 12 months
From Dec. 2006 to August 2020 (+ September 2020 provisional)
(in %)
4 - Loan amounts of bankrupt non-financial firms over loan amount of all firms - broken down by firm size
Aggregate over the past 12 months
From Dec. 2006 to August 2020 (+ September 2020 provisional)
(in %)
Source: Banque de France, Companies Directorate. Data available in early October 2020: final for August, provisional for September.
Impact of the lockdown and of the adaptation of the regulations concerning companies in difficulty on corporate bankruptcies statistics
In the context of the Covid-19 health crisis, at a time when economic activity slowed down sharply, putting a large number of companies in difficulty, the number of corporate bankruptcies paradoxically posted a marked decline. This can be explained both by the lockdown which affected the functioning of commercial courts, and by the adaptation of regulations which temporarily granted additional time both to assess the state of insolvency and to report it.
Number of monthly corporate bankruptcies (gross data, 2018 - 2020)
Source: Banque de France, Companies Directorate. Data available in early October 2020.
Note for the reader: Final data up to August 2020, provisional for September 2020.

The closure from 16 March 2020 of all courts (with the exception of courts that have to judge "essential disputes", which do not include the commercial courts) sharply reduced the activity of commercial courts, which was essentially dematerialised during the lockdown. As a result, the opening or conversion of a large number of proceedings was postponed.

The Order 2020-341 of 27 March 2020 adapting the rules regarding companies and agricultural holdings in difficulty to the health emergency and amending certain provisions of criminal proceedings, also introduced changes likely to postpone the examination of situations of insolvency for companies whose situation worsened during the period of economic slowdown. In particular, it provides that until 24 August 2020:
  • the assessment of the situation of insolvency be frozen at 12 March 2020 (Article 1, I, 1°) ;
  • conciliation periods be automatically extended (Article 1, II);
  • safeguard plans be extended by decision (Article 1, III).
Thus, for the period from 12 March to 24 August 2020, a company that would have been considered as being insolvent under the previous regulations will not be considered as such since its situation will be assessed at 12 March 2020, the date on which it was not insolvent. At the end of this period, companies have 45 days (legal timeframe, see Article L631-4 of the French Commercial Code) to declare themselves in a situation of insolvency if applicable.
At the same time, Order 2020-306 of 25 March 2020 provides that the requests for the initiation of collective proceedings, for any company considered insolvent, due to be made between 12 March 2020 and 24 June 2020, be deemed to have been made within the legal timeframe, if they are made within the legal timeframe as from 24 June 2020 (i.e. 45 days, see Article L631-4 of the French Commercial Code). Thus, declarations that would otherwise have been made earlier will be carried forward after this date.
More information on: methodology, time series, calendar
All the series published by the Banque de France are available at the following address
Webstat Banque de France
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Corporate bankruptcies
STAT INFO - September 2020
Contact: GPS.support@banque-france.fr

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Business failures - France
  • Published on 10/16/2020
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Published on Friday, October 16, 2020