The French economy is on a drip: the government has massively helped companies survive the unprecedented health and economic situation that the country went through in 2020 … and rightly so. But the beneficiaries of this aid have perhaps only delayed the inexorable a little: the number of insolvencies is in free fall, a statistical anomaly which will exacerbate the fall of 2021.
Less than 35,000 companies went bankrupt in 2020
The number may seem enormous, but compared to the number of companies in France, around 3 million, almost all of which are very small businesses (more than 9 out of 10 companies), it remains low: according to the Altarès firm which carried out a study on business failures published Monday, January 18, 2021, 32,184 business failures were recorded in France. This is more than a third less than in 2019 (38.1%) when more than 50,000 failures were recorded.
The reason ? State aid, of course, which has therefore benefited several thousand companies that have closed the door to the health crisis or not. We should therefore expect, logically, that the number of bankruptcies will explode in 2021: it is probably not in 2020 that these companies, despite state aid, were able to raise the bar … and the economic crisis should hit France hard.
A general reduction in all procedures
The Altarès study underlines that this downward trend affects all existing procedures: 49.4% fewer legal receipts were recorded in 2020 over one year, 33.7% fewer court-ordered liquidations over the same period.
But the situation should not last: the Altarès cabinet explains that the main reason for this exceptionally low number of defaults is the disappearance of the claims of creditors. However, they should start claiming their due again in 2021.
And we must not forget that companies that have benefited from a State Guaranteed Loan (PGE) will have to start repaying it: if the government has planned to postpone the first deadline because of the pandemic which continues longer than expected, this deadline will be due… and if the debtor company does not have enough cash, that could pose a problem.