Record Number of German Insolvencies in 2003

A record number of German businesses filed for insolvency last year, according to a report by credit-checking agency Creditreform. Nearly 40,000 businesses went under in 2003, 5.5 percent above that of 2002. The total was projected from January-October figures published by the Federal Statistics Office. Creditreform, based in Düsseldorf, forecasted the number of insolvencies would, at best, continue for some time at the current high level. But it said it was more likely the annual rate would creep up another 5 percent to 42,000. Vacant shops and offices have become a common sight in some German cities in recent weeks as leases expire and weak businesses close. Not even the expected boost from the Christmas period and winter sales has helped pull German firms out of their decline. Creditreform chief executive Helmut Roedl told reporters that the principal challenge for troubled firms was a shortage of financing and customers failing to pay their bills. Banks wanted to eliminate bad risks from their books and pushed for companies to claim bankruptcy.