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Covid 19 risk for companies? Beware of future waves of bankruptcy!

In our opinion, we have been pushing a wave of bankruptcies ahead of us since last year, which will pose a real challenge for many creditors.

The reason for this is not only to be ascribed to the Covid 19 situation as such, but also to the economic situation of the companies concerned, some of which were already ripe for bankruptcy before the crisis. The fact that a precise examination of the economic possibilities when granting the loans and deferrals was not possible or only insufficiently possible is due to the situation and is easy to understand.

Many AWS loans were therefore probably used for solving the already acute old liabilities and the one or the other deadline extension will only cause a delay of bankruptcy.

As helpful as the state subsidies were, a number of "zombie companies" were created and artificially kept alive.

As the expectations show, many AWS bridging loans and tax deferrals granted last year will be become due this year or the next year at the latest. These will then be the trigger for a long-awaited wave of bankruptcies. This could cause continuation and possibly dramatize the liquidity risks before the Covid-19 crisis.

Conclusion:

So beware! The expected increase in bankruptcies will pose huge challenges for creditors. So take a closer look when you grant supplier credits (credit check!). Even during receivables management, you must react promptly and become more proactive and creative in your enforcement strategy to collect assets.

We, Sentinel Group GmbH own the necessary expertise, the necessary networks and 20 years of experience in more than 100 cases to support medium-sized enterprises in this challenge.