Bankruptcies rise to record level

A record number of businesses have thrown in the towel. www.cdrfinancial.com

More and more Swiss companies and individuals are facing the prospect of bankruptcy, according to figures published on Wednesday.

Nearly 7,000 applications for insolvency were lodged in the first eight months of the year – the highest number on record.

Corporate failures rose by 8.8 per cent during the period from January to August 2004, according to research conducted by the Swiss business information agency, Creditreform.

Last month alone 348 companies were forced into receivership.

“The percentage increases are statistically significant. We’re not just talking about a blip on the screen – it’s more than that,” said Jean-Christian Lambelet, a professor of economics at Lausanne University.

“We are in a period of recovery, but it is a somewhat hesitant recovery, so it’s not surprising that bankruptcies should increase. They often lag behind economic growth,” he told swissinfo.

Worst affected

Italian- and French-speaking areas were worst affected. The number of firms declaring themselves insolvent rose by nearly 37 per cent in canton Ticino and by 21 per cent in western Switzerland.

Declarations of bankruptcy were also up nearly eight per cent in canton Zurich.

Lambelet said the high number of bankruptcy declarations in Ticino – which borders Italy – could partly be put down to the effect of a recent tax amnesty granted to Italians who repatriated their savings.

“There has definitely been a problem in Ticino following the fiscal amnesty, and this has been an important contributing factor,” he said.

“The amnesty has hit the banking and financial sector to a considerable degree, and if these two sectors are in trouble this will have an impact on the rest of the economy.”

Exception

Only the northwestern region of Switzerland saw a decline in the number of applications for insolvency. Creditreform reported that cases of bankruptcy fell in that part of the country by 7.8 per cent.

The agency also noted that more and more requests to start up new companies were being lodged with the authorities.

Between January and August, nearly 23,000 applications to set up in business were received – ten per cent more than during the same period last year.

Lambelet said Creditreform’s statistics pointed to the fact that Switzerland was currently undergoing a period of “fragile” economic recovery.

“Although I am still very cautious, in all probability I think we can expect the number of bankruptcies to fall next year.”

swissinfo, Ramsey Zarifeh

Key facts

Files for bankruptcy (January to August 2004): 6,940
Corporate bankruptcies: 3,280 (+8.8%)
Private bankruptcies: 3,660 (+6.5%)
Worst-affected canton: Ticino (corporate bankruptcies up 36.7%)