When it comes to the financial health of companies and bankruptcies, we have a better understanding of the current state of affairs than anyone else. In these special times it is very important to keep a finger on the pulse of the financial health of your buyers and suppliers. The barometer shows the current bankruptcies every month in comparison with previous periods and other sectors. Notable this month are the high number of bankruptcies in the industries Holdings and other investment companies, Construction and Corporate Services.
By June 2021 (1-7-2021), a total of 101* bankruptcies have been declared. That's a whopping 66% fewer than the number of failures during the same period last year (295). This number is expected to increase somewhat. With 192 bankruptcies, March 2021 is still the month with the most bankruptcies in 2021. Since the beginning of the corona crisis, the number of bankruptcies has been low, even lower than before the corona crisis. This is a result of government support to ensure that normally healthy organizations stay afloat during the crisis. A side effect of these support packages is that financially unhealthy organizations also do not go bankrupt. It is expected that these bankruptcies (Dutch) will occur when government support is removed. *This is a preliminary count.
Analysis support measures
An Dun & Bradstreet analysis of 93,000 companies that received support through the NOW scheme shows that, relatively speaking, the most active organizations also received the most NOW support. So it's not the "zombie companies" that are sitting back and benefiting from support.
These are the most active organizations that also receive the most NOW support, relatively speaking. Of all NOW recipients, 83 percent are average to very active, when it comes to sending invoices and paying bills, for example. This is according to an analysis by business data specialist Altares Dun & Bradstreet of the more than 93,000 companies that received support through Temporary Emergency Measures Bridging Employment (NOW). The least active organizations also receive the least support. So it's not the "zombie companies" that are sitting back and benefiting from support.
Corona support packages stop as of October
Rapidly rising vaccination rates and favorable economic prospects have led the Cabinet to decide to cut support for companies and not to extend it at all after the third quarter. This is what the ministers concerned write in a letter to Dutch parliament.
The outgoing cabinet previously announced that it would extend the support packages for another three months to the end of September and then probably discontinue them. The positive outlook, rising vaccination rates and declining occupancy rates in hospitals have also prompted Minister Wouter Koolmees to decide to cut the ongoing support packages. Within the NOW wage payment scheme, companies can only claim up to 80% loss of turnover, which also means that they can still receive compensation for up to 80% of their wage bill. Of this, 85% is reimbursed, the so-called compensation percentage that already applies. A company that suffers 100% turnover loss due to corona thus receives support for 68% of its wage costs (80% X 85%). For companies with turnover losses between 20% and 80%, nothing changes.
Top 10 industries with most bankruptcies in June 2021
Within the industries of Holding Companies and Investment Companies (15), Construction (19) and Business Services (11), the most bankruptcies were declared in June 2021.
Top 10 sectors with most bankruptcies throughout 2021
If we look at the top 10 industries with the most bankruptcies in all of 2021. We can conclude that over 12% of bankruptcies are attributable to holding companies and investment companies, 16% to construction companies and 10% to the business services sector.
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