High Bankruptcy Rate

Nearly 600 Companies Have Already Gone Bankrupt This Year

Insolvency figures in Upper Austria remain at a high level (stock image).(Bild: stockcopter - stock.adobe.com)

Nearly 600 companies were forced to file for bankruptcy in Upper Austria during the first three quarters of the year—keeping the number of bankruptcies at a high level. The retail, construction, and hospitality sectors have been particularly hard hit.

Exactly 599 companies went bankrupt in Upper Austria during the first three quarters of this year, according to an estimate by the creditors’ protection association KSV1870. That’s more than three business bankruptcies per court day and roughly the same number (down 0.8 percent) as in the same period last year. The number of insolvencies thus remains at a high level. “The weak economy, subdued consumer demand, and high costs are putting a strain on Upper Austrian businesses and weakening the financial health of many companies,” says the KSV, explaining the high number of insolvencies.

Particularly concerning: 3,030 employees were affected by the bankruptcies—an increase of about 18 percent. The number of creditors, on the other hand, fell by 15 percent to 8,500. In total, insolvent companies in Upper Austria accumulated approximately 291 million euros in debt during the first three quarters.

Rejected proceedings are on the rise
Another trend is evident: In 45 percent of all corporate bankruptcies, insolvency proceedings could not be initiated due to a lack of funds to cover costs—meaning that in these cases, the companies did not even have the money to pay the procedural costs. “If the number of cases not opened rises, creditors’ financial losses will increase even further,” warns Petra Wögerbauer, head of KSV1870 in Linz. This is likely due in part to the fact that companies often wait too long to file for bankruptcy.

Retail, Construction, and Hospitality Particularly Affected
This year in Upper Austria, there were a particularly high number of insolvencies in retail (131 cases), the construction industry (89), and the lodging and food service sectors (76). Wögerbauer explains it this way: “Retail is particularly affected by declining purchasing power and consumer reluctance. The construction industry is struggling with high material and energy costs, as well as rising labor costs”—in addition, public construction contracts are declining due to budget constraints. And the hospitality sector continues to grapple with high operating and labor costs.

Across Austria, the KSV recorded 5,139 business insolvencies in the first three quarters—which is roughly the same number as in the same period last year. Vienna naturally tops the list with just over 1,900 cases.