Which country will see first in 2020
Dmitry Knorre / stock.adobe.com
2020 was only a preliminary skirmish, when it comes to restructuring things will only get serious this year. This is what the vast majority of the 143 restructuring experts surveyed by the restructuring consultancy CIC Consultingpartner assume. Most of the participants in the survey work for banks and other financiers in crisis situations; almost every fifth respondent is a consultant.
According to the survey, 70 percent of those questioned expect that coronavirus effects will shape the German economy even more this year than in the previous year. Only 4 percent expect a swift economic recovery - even though the survey took place from the end of November to mid-December before the announcement of the stricter lockdown in Germany.
35 percent assume that the number of renovation cases will "increase sharply" in the next twelve months, 65 percent assume an "increasing" number. Not a single respondent expects the numbers to remain the same or even decline. The renovators classify the automotive and supplier industries as particularly vulnerable to crises. It ranks ahead of the retail and mechanical engineering sectors, which have been badly hit by the pandemic.
Lenders fear zombification
Particularly worrying: More than nine out of ten respondents rate the risk of "zombieing" German companies as high. Zombie companies are highly indebted companies that are in deficit and can only survive thanks to cheap loans. State corona rescue programs and the recently extended suspension of the obligation to file for insolvency have recently fueled the discussion about zombie companies.
Digitization falls by the wayside when it comes to renovations
The behavior of the CFOs and their management colleagues also met with criticism from the financiers: According to 70 percent of those surveyed, companies behaved “reactively and wait-and-see” when recognizing crisis situations. This typical “displacement effect” is apparently still being strengthened by the limited obligation to file for insolvency, criticize study authors from CIC Consultingpartner. The company's own crisis is justified and relativized with the pandemic.
"70 percent of those surveyed find that companies react reactively and wait-and-see in crisis situations."
In addition, at 84 percent, the vast majority do not consider the need for digitization to be sufficiently taken into account in current restructuring cases. "This is extremely surprising, because crises rarely show advanced digitization," write the CIC consultants. Therefore, in almost every renovation concept, digitization should be at the center of the measures to increase productivity and future orientation.
Preventive remediation is advocated
On the other hand, the new Corporate Stabilization and Restructuring Act (Starug) received encouragement from the respondents. 80 percent of the study participants welcome the law, which now also enables preventive renovation in Germany. In particular, the fact that a restructuring plan can be implemented against individual consensus disruptors without insolvency proceedings is rated positively.
However, the high approval rates could also have something to do with the timing of the survey, as the CIC itself admits. At the time of the survey, only a draft of the law was available, but some parts of it were still changed. Originally, for example, a possibility of contract termination was provided, with which troubled companies should get out of rent or delivery obligations. However, this point was deleted at the last second, which is why some experts now classify the new procedure as less effective.
desiree.buchholz [at] finance-magazin.de
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