In our view, we have been facing a wave of insolvencies since last year, which will pose a real challenge for many creditors.
This is not only due to the Covid 19 situation per se, but also to the economic situation of the companies concerned, many of which were already insolvent before the crisis. The fact that it was not possible, or only insufficiently possible, to carry out a precise review of the economic possibilities when granting the loans and deferrals is due to the situation and is easy to understand.
Many AWS loans were therefore probably used to service already acute legacy liabilities and even the one or other extension of the deadline will only delay the insolvency.
As helpful as the state subsidies were, a number of “zombie companies” were created and artificially kept alive.
It is therefore to be expected that many of the AWS bridging loans and tax deferrals granted last year will come to fruition this year or next year at the latest. They will then probably be the trigger for a long-awaited wave of insolvencies. This could continue and probably dramatize liquidity bottlenecks before the Covid-19 crisis.
Conclusion:
So watch out! The expected increase in insolvencies will present creditors with huge challenges. Therefore, take a closer look when granting supplier credit (credit check!). You also need to keep up to date with receivables management and become more proactive and creative in your enforcement strategy in order to recover assets.
We, the Sentinel Group GmbH, have the necessary expertise, the necessary networks and 20 years of experience in well over 100 cases to support medium-sized companies in this challenge.
