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Corporate insolvencies worldwide - Statistics & Facts

Simply put, insolvency happens when a business is not able to pay its debts. When a company is not able to locate funds to pay debts that are due, for example through taking on additional debt, it can legally file for bankruptcy. The company is then dissolved, and its assets are sold, usually by a third party such as a law firm, with the money received being divided between the company’s creditors. Often this process often takes a year or more to be completed, although this varies significantly between countries. As a rule, creditors do not receive the full amount they are owed when a company files for bankruptcy. In most countries, a condition for filing for bankruptcy is that the company’s assets are not sufficient to cover the total amount of debt they owe. Is it often the case that the outstanding debt is much higher than the value of the underlying assets.

Insolvencies across different countries

The differences in the level of insolvencies between countries result from various economic, institutional, and legal conditions. In 2019, France was the country with the most business insolvencies worldwide. With 52,100 insolvencies reported in that year, it had more than twice as many insolvencies as the second country on the list, the United States. In China, the number of business insolvencies has grown dramatically in recent years, increasing almost fourfold since 2015 to reach 12,750 in 2019. While this increase is partially due to the growth of corporate debt in China over this period, it also reflects changes made to bankruptcy processes. In 2007, the Chinese bankruptcy code was overhauled, and specialized courts for bankruptcy proceedings were established between 2007 and 2017.

Effect of coronavirus pandemic on the number of insolvencies

The governments all over the world have restricted operations in many businesses due to the outbreak of coronavirus (COVID-19) pandemic. It is quite probable that numerous companies operating in such sectors as personal services, retail trade or travelling will face serious financial problems and in worst case scenario file for bankruptcy.
On the other hand, many countries have also offered unprecedented levels of financial support to businesses, which may partially mitigate the worst effects of the crisis.

Interesting statistics

In the following 5 chapters, you will quickly find the 33 most important statistics relating to "Corporate insolvencies worldwide".

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