Will 2024 be a record year for the number of insolvencies in France?
With the number of bankruptcies approaching 70,000, 2024 is likely to be a record year for business failures. Denis Ferrand, Managing Director of Rexecode, confirms that the most indebted businesses are obviously the most prone to this situation, but he believes that we are going beyond the post-covid catch-up.
This is indeed the observation made by turnaround professionals, who are returning to a 'normal' level of activity after 3 years.
While economic factors cannot be discounted (slower growth, stalled investment, tighter financing conditions, etc.), the companies that have made the most use of State Guaranteed Loans (SGLs), as they are known, are the most vulnerable.
Dealing with these difficulties upstream by renegotiating deadlines as part of the ad hoc mandate and conciliation procedures often remains the only solution for dealing with this situation and avoiding collective proceedings (receivership or compulsory liquidation).
This is the prerequisite for extending the maturity of SLGs beyond the initial 6 years (2 years of grace and 4 years of repayment). That said, this extension does not leave companies unscathed, since extending the maturity of loans is necessarily accompanied by a reduction in the Banque de France rating as well as an increase in the risk of default.
"The companies that are falling are those with higher than average debt. This fragility is likely to worsen if French interest rates are higher" Denis Ferrand, Rexecode
"Les entreprises qui tombent sont celles qui sont plus endettées que la moyenne. Cette fragilité risque de s'aggraver si les taux d'intérêts français sont plus élevés" Denis Ferrand, Rexecode
