Collective procedures: what will be the results in the first half of 2022?

A general economic situation that is still deteriorating

On the commodities front, although prices remain high, an improvement was noted at the end of the second quarter. On average in June, prices fell by 20% for energy, metals and agricultural products after an international boom linked to the strong economic recovery and then to the war in Ukraine.

On the supply front, many shortages and difficulties remain, particularly in the industrial and construction sectors (electronic components, metals and materials). According to the IMF, these bottlenecks could last until the end of 2022 or early 2023.

For transport, the rental price of freight containers, after peaking in September 2021, has fallen by 40%. It is now the fear of a sharp slowdown in demand and the gradual return to normal, in terms of post-health crisis GDP growth, that prevails.

According to INSEE's provisional estimate at the end of the month, consumer prices rose by 6.1% in July 2022, after +5.8% the previous month, still on a yearly basis. In this context, household consumption, which is marking time, declined between January and April 2022 and only slightly increased in May (+0.7%), while at the same time measures to help individuals are being implemented

Number of collective proceedings now higher than in 2020 and 2021

At the end of June 2022, over a sliding 12-month period, the number of business failures (openings of receivership and direct judicial liquidation) was still up on the same period in 2021 (+15.5%). It now exceeds the cumulative total for 2020 by more than 2,600 procedures.

The lethality remains very high, as 77% of the procedures opened are judicial liquidations. The same trend can be observed for safeguard procedures, the number of which has risen by 11% over the past year, reaching a level now exceeding 2020. In terms of jobs threatened by these procedures, we are approaching 144,000 salaried jobs.

In the first half of 2022, the number of judgments opened, all procedures included, shows an increase of 41.7% compared to January-June 2021.

Compared to Q2 2021, the increase in the number of insolvencies is 47%, but slightly down by 3% compared to Q1 2022. The number of insolvencies in the same six-month period will rise by almost 70%, and by 25% compared to Q1 2022.

Concerning the other insolvency procedures in Q2 2022, a clear increase in the number of publications of homologation of conciliation and amicable settlement is noted.

Continuation of activity in the form of continuation or safeguard plans remains very limited and is still declining. Only the number of total or partial disposal plans has increased compared to Q1 2022.

The new crisis exit procedure is still little used, with about twenty procedures per quarter. A little more flexibility is emerging within the courts with a greater number of renewals of the observation period.

Few sectors of activity spared

Over the last 12 months, the top three sectors recording the most insolvencies have remained unchanged: construction and public works, personal services and business services still account for more than half of all receivership and liquidation decisions (53.3%), and almost 45% of safeguard procedures.

At the end of June, only the Agriculture & Fishing sector recorded a slight decline of 2.4% in the number of insolvencies, and a more marked decline in the number of safeguards (-22%).

However, in a more severe context of household consumption arbitrage, in the face of galloping inflation, certain sectors of activity are more particularly impacted, such as Distribution with +29%, Telecommunications with +30%, and Financial Services with +27% of business failures.

Upstream, industries and services are also suffering from the deleterious effect of rising raw material and energy prices, such as the food industry, with a 29% increase, the wood-paper-cardboard-printing industry, with a 30% increase, and the transport and logistics industry, with a 26% increase in business failures.

In terms of safeguard procedures, significant increases in the number of insolvencies were recorded in Media & Entertainment (+55%), Personal Services (+46%) and Food & Beverage (+44%).

The building and public works sector is under great pressure

The Russian-Ukrainian conflict has shaken up markets that were already under pressure. Energy prices were unaffordable, and this has given a strong boost to inflation. All the construction trades have been globally impacted by increased demand, insufficient production, an explosion in the price of raw materials and a rise in production costs... The situation of the construction industry has become very worrying. Not to mention the postponements or cancellations of work by private individuals or the penalties for delays in public contracts...

Metals, wood, rubber... The costs of these basic products are constantly on the rise. Some raw materials may become unavailable in the short term, thus having a lasting impact on all ongoing projects.

Steel prices have risen by 50% since the beginning of 2021, polymer prices are soaring, and lumber prices have tripled in the last twelve months...

Faced with this difficult context, the construction industry's crisis cells have been reactivated in the départements, bringing together, under the aegis of the Prefects, all the players in the sector. The aim is to discuss the issues at stake locally and try to resolve them.

SMEs in the public works sector, which have been particularly affected by the rise in the price of non-road diesel fuel, benefit from a specific aid package (a total of €80 million, paid in one go, in proportion to the turnover of eligible companies).

Highly impacted regions

Île-de-France, PACA and Auvergne-Rhône-Alpes account for nearly 47% of business failures in mainland France. For safeguard procedures, New Aquitaine, Île-de-France, PACA and Auvergne-Rhône-Alpes account for around 50% of procedures opened.

Some regions are particularly hard hit, with the number of insolvency proceedings rising sharply. In Hauts-de-France, for example, the number of business failures has risen by 37% over the past year and the number of insolvencies by 39%.

This trend was also noted in Bourgogne-Franche-Comté, with insolvencies up 26% and safeguarding cases up 78% respectively, and in Centre-Val de Loire with increases of 28% and 23%. In these three regions, the sectors suffering most from the economic downturn are Consumer Services, Distribution, Food Processing, Wood-Paper-Cardboard-Printing and Industrial Equipment.