Company failures are not increasing more dramatically – News

The development of bankruptcies, or their comparison in different time series, rather resembles a swing. Although the current negative outlook is exacerbated by shutdowns in the automotive industry and the insolvency of some well-known brands, most recently the seller of Eiffel Optic glasses, the number of failing companies is not increasing dramatically even now.

“From the point of view of long-term development, from 2014 to 2018 there were year-on-year decreases in the number of bankruptcies of commercial companies. In the period from 2019 to 2022, however, the development of year-on-year changes in the number of bankruptcies is variable,” Ondřej Pirohanič from CRIF – Czech Credit Bureau, which monitors detailed information on companies, confirmed in his analysis.

According to him, before the pandemic in 2019 there was a four percent increase in crashes, in 2020, when covid first struck, on the contrary, there was a twelve percent decrease.

A 23 percent increase followed in 2021, the highest year-on-year percentage increase in corporate bankruptcies since 2010.

“Last year, however, there was a six percent decrease compared to 2021,” Pirohanič added.

Last year, the Iceland supermarket chain ceased operations, and the Dedoles brand went bankrupt, for example. Hervis Sport and Orsay also started to withdraw from the market. On the other hand, four dozen new brands entered the country, a third of them fashionable.

According to the Association for Electronic Commerce, however, for the first time ever in history, the turnover of online stores fell by 12 percent year-on-year.

A more significant reduction in their number is expected during this half-year.

In addition, after eight years, payment morale among firms began to deteriorate, with the average delay in invoice payment increasing by two days to a total of 23 days, according to debt collection agency EOS KSI.

In the last month of January, 1,550 companies disappeared in the Czech Republic. Although this is the most since March 2020, on the other hand, a lot of new businesses were created – 2,805 were founded. In both cases, this is above average.

“In January, there was a noticeable high turnover of companies. The most companies were founded in the last almost two years, but at the same time a large number of them disappeared,” confirmed Věra Kameníčková from CRIF. “For every ten companies that disappeared, there were eighteen new ones in January,” the company said.

In total, the number of commercial companies in the Czech Republic has increased by 14,241 since last February, which, according to CRIF, is less in a year-on-year comparison, but still more than two and three years before.

However, the net increase in the number of companies, i.e. the difference between the number of creations and the number of closures, in the last 12 months did not reach the level of two years before the pandemic.

“Bankruptcies make up only a small part of defunct companies and sole proprietors,” analyst Kameníčková added for Právo.

According to her, in 2022, compared to 2021, the courts declared fewer bankruptcies of both companies and entrepreneurs. The number of defunct companies did not change significantly, but the number of defunct entrepreneurs increased considerably, Kameníčková added.