A surprising trend in the context of the economic crisis. Business failures fell 23.5% year on year in May, due to regulatory provisions and lower activity by commercial courts, the Banque de France reported on Monday. For the month of June, provisional data collected by the institution show an even stronger drop in business failures, of 25.4%.
“At a time when economic activity is suddenly slowing down, putting a large number of companies in difficulty, paradoxically, the number of business failures is dropping sharply“, notes the central bank in a press release.” This is explained both by the period of confinement which has affected the functioning of commercial jurisdictions, and by the adaptation of the regulations which temporarily grant additional time to assess the ‘state of suspension of payments only to declare it,’ the text continues.
“In all sectors”
The assessments of the state of insolvency are thus frozen between March 12 and August 24, and the legal deadline for a request to open bankruptcy proceedings has been extended for requests that had to be made between March 12 and June 24. Also according to the Banque de France, the drop in business failures in May “can be observed in all sectors and for most categories of business, without this being able to be analyzed from an economic point of view” .
The figures nevertheless show an increase in insolvencies of large companies (GE) and mid-size companies (ETI, between 250 employees and 5,000 employees). In May, the Bank of France totaled 42 against 36 a year earlier (+ 16.7%). In June, the increase even reached 38.2% with 47 defaulting GEs and ETIs, according to provisional data.